Two of the world’s leading memory chip manufacturers, Samsung Electronics and Micron Technology, have warned that tight COVID-19 restrictions in the Chinese city of Xian could disrupt their chip production operations.
The city’s shutdown adds to a tumultuous year for exporters, who have been hit by dramatically higher freight costs while raw material prices, especially semiconductors, have skyrocketed amid the two-year-long pandemic.
Micron said on Wednesday that the restrictions could cause delays in the supply of DRAM memory chips, which are widely used in data centres.
The strict restrictions, which went into effect earlier this month, may be more difficult to overcome, according to Micron, and have resulted in lower staffing levels at the manufacturing facility.
Samsung Electronics also announced on Wednesday that operations at its Xian production facility for NAND flash memory chips, which are used for data storage in data centres, cellphones, and other electronic gadgets, will be temporarily adjusted.
According to Chinese media outlet Yicai, Samsung’s Xian semiconductor plant is currently operational. According to TrendForce, Samsung’s Xian facility is currently operating without major delays, and raw material supplies appear to be adequate, although output may be reduced slightly if the pandemic is not contained.
According to analysts in Seoul, chips produced at Samsung’s Xian NAND plant primarily travel to China, with only a few shipments to other countries. They stated that Chinese server businesses are among the major buyers of the chips generated in the plant.
According to TrendForce, any changes in operations at the Xian production site may have a direct influence on smartphone and notebook computer producers, but Samsung’s relatively substantial inventory level can serve buyers without hitches in the short term.
From December 23, Chinese officials have put strict restrictions on travel within and out of Xian, as part of Beijing’s effort to quickly suppress epidemics when they emerge.
With almost 1,100 cases in total during the most recent flare-up, the COVID-19 outbreak in Xian is the largest seen in any Chinese city this year.
“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 went on to say that it was attempting to reduce the risk of virus transmission by implementing measures such as physical separation and on-site testing, as well as advocating immunisation.