Samsung Electronics has successfully settled a lawsuit with an American insurance company for $400 million. This settlement comes about a year and a half after the company contested claims for damages resulting from power outages at its semiconductor plant caused by a severe winter cold snap.
On the 7th, Samsung’s Austin Semiconductor Facility submitted the settlement agreement with Factory Mutual Insurance to the U.S. District Court for the Western District of Texas.
The legal dispute began in February of last year when Samsung Electronics filed a lawsuit against FM Global, a U.S. commercial insurance provider. The main issue at stake was the compensation for damages caused by a power outage that lasted about three days during a snowstorm in Texas in February 2021. Due to the nature of semiconductor manufacturing, restarting operations after a shutdown is a lengthy process. Samsung halted operations for about a month following the power outage on February 6th and only managed to ramp up production to 90% capacity by the end of March.
Industry estimates at the time of the incident suggested that Samsung’s damages amounted to $375 million. In its first-quarter earnings report, Samsung detailed the impact: “The power outage in the Austin area disrupted semiconductor wafer production, resulting in losses equivalent to about 71,000 wafers.” The company further quantified the damages, noting 300 to 400 billion KRW.
Given the extent of these losses, Samsung sought more than $400 million in compensation. However, the insurance company only agreed to pay $126 million, arguing that damages to properties not covered by the insurance policy were not eligible for compensation.
As a result, Samsung decided to file a lawsuit. After a prolonged legal battle, the company has reached a settlement, which is currently pending court approval.
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