Samsung, Micron warn China's Xi'an lockdown could affect memory chip manufacturing

KEY POINTS

• Samsung Electronics and Micron Technology, two of the world's largest memory chip makers, warned that a Covid-19 lockdown in the Chinese city of Xi'an could affect their chip manufacturing bases in the area.
• Micron said on Wednesday the lockdown could lead to delays in the supply of its DRAM memory chips, which are widely used in data centers.
• Samsung Electronics said that it will temporarily adjust operations at its Xi'an manufacturing facilities for NAND flash memory chips, used for data storage in data centers, smartphones and tech gadgets.

A sanitation worker sweeping a deserted road in Xi'an in China's northern Shaanxi province, amid a coronavirus lockdown in the city on December 28, 2021.

STR | AFP | Getty Images

Samsung Electronics and Micron Technology, two of the world's largest memory chip makers, warned that a Covid-19 lockdown in the Chinese city of Xi'an could affect their chip manufacturing bases in the area.

Micron said on Wednesday the lockdown could lead to delays in the supply of its DRAM memory chips, which are widely used in data centers.

It said the stringent restrictions, which went into effect earlier this month, may be increasingly difficult to mitigate and had resulted in thinner staffing levels at its manufacturing site.

Samsung Electronics also said on Wednesday that it will temporarily adjust operations at its Xi'an 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 Xi'an from Dec. 23, in line with Beijing's drive to immediately contain outbreaks as they appear.

"We are tapping our global supply chain, including our subcontractor partners, to help service our customers for these DRAM products," Micron said in a blog post.

"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.

Micron 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.

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

Seoul-based analysts said chips made in Samsung's Xi'an NAND plant 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 said in a late October earnings call that it had entered the July-September quarter with low inventory of NAND chips, and intended to normalize inventory level during that quarter. It is expected to announce October-December earnings results in January.