Samsung chip lines now working

SEOUL Sat Aug 4, 2007 7:43am BST

Samsung Electronics' 16 gigabit (Gb) NAND flash memory chips are seen in this picture released by Samsung in Seoul April 29, 2007. Samsung said on Friday it shut down six of its chip production lines after a power cut at a plant near Seoul, prompting expectations of tighter supply and a rise in prices. REUTERS/Samsung Electronics/Handout

Samsung Electronics' 16 gigabit (Gb) NAND flash memory chips are seen in this picture released by Samsung in Seoul April 29, 2007. Samsung said on Friday it shut down six of its chip production lines after a power cut at a plant near Seoul, prompting expectations of tighter supply and a rise in prices.

Credit: Reuters/Samsung Electronics/Handout

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SEOUL (Reuters) - Samsung Electronics Co. Ltd. said its chip production lines hit by a power outage were fully operating by midday Saturday and expected total damage from the incident to be smaller than an earlier estimate.

The world's biggest maker of memory chips shut down six of its chip production lines on Friday after a power cut at its Kiheung plant, near Seoul.

The company now expects to lose 40 billion won ($43.4 million) from the outage.

U.S. research firm iSuppli Corp. said the incident could stretch the current NAND market shortage through to the first half of August, adding that the affected Samsung lines account for 35 percent of global NAND wafer output.

Samsung said all six lines were fully operating by 12:00 p.m. 4:00 a.m. British time), earlier than expected.

Samsung previously said full operation would begin no later than within two days and the damage would not exceed 50 billion won.

A problem at a switchboard at a transformer substation led to a power outage Friday afternoon, stopping six lines for memory and system logic chips at the plant.

The affected lines resumed production between early Saturday morning and midday after the power supply was restored late on Friday, Samsung said.

Some analysts had said the outage could wipe out as much as a month's worth of Samsung's total production of NAND flash memory chips, which are widely used for data storage in portable electronics.

Chips that were already in the fabrication process when the outage hit would have to be discarded while a ramp-up to the optimal production level could take some time, they said.

"The Samsung outage comes at a critical juncture in the NAND market, when conditions are set to shift from shortage to oversupply," iSuppli said in a report dated Friday. "The major factor to watch now is how quickly Samsung actually recovers from this outage."

It would not have a major impact on Samsung's earnings given the fast recovery, iSuppli added.

Shares in Samsung, South Korea's biggest stock with a market capitalisation of $94 billion, ended flat on Friday while its NAND rivals, including Japan's Toshiba Corp. and South Korea's Hynix Semiconductor Inc., rose on expectations of higher prices.

But shares of Apple Inc. fell overnight as the maker of popular iPod digital media player may be forced to pay more for NAND flash.

Samsung had a 44 percent share of the world's NAND flash market at the end of the first quarter, according to iSuppli.

($1=922.6 Won)

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