Report: Samsung looking to outsource production of its memory controllers

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Samsung will reveal the Galaxy S21 lineup on January 14.

Samsung’s foundry division is interested in outsourcing production of its computer memory controllers because of the global chip shortage, reports DigiTimes.

The conglomerate wants a third-party provider to fabricate those components because its internal manufacturing capacity is strained.

In addition, Nikkei Asia states the firm intends to bring its Austin, Texas manufacturing complex back to full capacity by June. It took the plant off-line for over a month after a devastating winter storm hit the region earlier this year.

Samsung Might Outsource Memory Controller Production

Despite being one of the industry’s largest providers, Samsung is not immune to the impact of the worldwide chip crunch. The intense demand for consumer electronics that followed the coronavirus pandemic has sold its production lines and strained its component inventories. According to DigiTimes, the corporation’s foundry unit has stopped fabricating memory controllers for its mobile device department.

Samsung’s chip production arm chose to direct its resources to fabricating more application processors for its smartphone division.

The conglomerate deprioritized its intra-organization memory controller orders because its high-margin phones are attractive to consumers. Last year, it sold an estimated 255.7 million handsets, making it the world’s largest cellular phone vendor. But the company said it might not launch a Galaxy Note this year because of the component supply problem.

However, Samsung is reportedly seeking to work with another manufacturer to fulfill its sourcing needs.

As of this writing, the corporation has not publicly announced plans to work with a third-party provider.

Austin Chip Complex to Reopen in June

Samsung is also dealing with chip fabrication challenges outside of its internal foundry operations.

The firm is working hard to bring its Austin semiconductor plant back to full production by early June. Like other area chipmakers, Samsung shuttered its Line S2 in mid-February after a severe weather event overloaded the Texas power grid. A regional utility operator asked the company to close the facility to preserve electricity for area residents.

Samsung complied with the request and brought the plant back online in late March.

Unfortunately, the conglomerate has been unable to restore the site to its normal utilization level. It initially tasked its production lines with producing minimal output to calibrate the fabrication process. Subsequently, it ran into a delay getting components for some of its equipment. With those obstacles overcome, it aims to complete the restoration in May and resume normal operations in June.

At present, the corporation has not offered an estimate regarding its financial losses for keeping the complex dormant. Industry analysts estimated its unscheduled downtime would cost it between $256 million and $353 million.

Market intelligence provider TrendForce believes the temporary closure of Samsung’s factory will greatly impact the smartphone sector.

The group believes the chipmaker dedicated 65 percent of Line S2’s output to fabricating 5G components for Qualcomm. The organization estimates the plant being inoperative for more than a month will prompt a 30 percent drop in overall fifth-generation handset production during the second quarter.

Realme and Xiaomi, leading Chinese mobile device vendors, claimed inadequate supplies of Qualcomm parts had constrained their output.

Although Samsung is dealing with two massively disruptive events, it reacted to them with remarkable responsiveness and shrewd decision-making. Hopefully, its operational resiliency will enable it to overcome its recent challenges as quickly as possible.

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