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

Samsung and Micron warn Xi'an lockdown could affect chip production

January 4, 2022: -Samsung Electronics and Micron Technology, the most significant memory chip makers globally, warned that a Covid-19 lockdown in the Chinese city of Xi’an could affect their chip manufacturing bases in the area.

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

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

On Wednesday, Samsung Electronics said it would temporarily adjust operations at its Xi’an manufacturing facilities for NAND flash memory chips, used for data storage in data centers, smartphones, and different tech gadgets.

Chinese officials have imposed strict curbs on travel within and leaving Xi’an from December 23, in line with Beijing’s drive to rapidly contain outbreaks as they appear.

“We are tapping our global supply chain, which includes 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. Although, there may be some near-term delays as we activate our network,” the company said.

Micron adds that it was working to minimize the risk of virus transmission, employed measures including physical distancing and on-site testing, and encouraged 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 that Samsung’s Xi’an NAND plant chips would mainly go to China with limited shipments to overseas destinations. Some of the most significant demand for the kind of chips made in the plant would come from Chinese server companies.

In a late October earnings call, Samsung said that it had entered the July-September quarter with a low inventory of NAND chips and intended to normalize inventory level during that quarter. It has to be announced October-December earnings results in January.

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