Tech Giants Warn China’s Lockdown Could Affect Memory Chip Manufacturing

Two of the world’s largest memory chip makers, Samsung Electronics and Micron Technology, have warned that the Covid-19 lockdown in China’s city of Xian could affect the manufacturing of chips in this area and might as well affect the global supply chain.

Micron reacting to the Xian’s lockdown said on Wednesday that the lockdown could lead to delays in the supply of its DRAM memory chips, which are widely used in data centers. This is also corroborated by Samsung Electronics that said that it will temporarily adjust operations at its Xian manufacturing facilities for NAND flash memory chips, used for data storage in data centers, smartphones, and other tech gadgets.

Chinese officials have imposed tough curbs on travel within and leaving Xian from Dec. 23, in line with Beijing’s drive to immediately contain outbreaks as they appear.

The COVID-19 outbreak in Xian is the biggest seen by any Chinese city this year, with over 1,100 cases in total during the latest flare-up.

Micron in a blog said; “We are tapping our global supply chain, including our subcontractor partners, to help service our customers for these DRAM products. We project that these efforts will allow us to meet most of our customer demand, however, there may be some near-term delays as we activate our network,” the company said.

The company added that it was working to minimize the risk of virus transmission and had employed measures including physical distancing and on-site testing and was encouraging vaccination.

Lockdown imposed in Xian might affect shipments of chips worldwide.

According to analysis, Samsung has two production lines in Xian making advanced NAND Flash products, which account for 42.5 percent of its total NAND flash memory production capacity and 15.3 percent of the overall global output capacity, according to analysis provider TrendForce.

The chips made in Samsung’s Xian NAND plant, according to an analyst said it would mainly go to the China market with limited shipments to overseas destinations, and some of the biggest demand for the kind of chips made in the plant would come from Chinese server companies.

Samsung is expected to its October-December earnings in January before we could understand if it has a high stock of NAND chips for this quarter as against its late October earnings which ran from July-September which was reported below.

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