Adding to the current supply chain pressures.
Two of the world’s leading memory chip producers, Samsung Electronics and Micron Technology, have warned that tight Covid-19 limitations in the Chinese city of Xian might disrupt their chip production hubs in the area.
The city’s shutdown adds to the strain on global supply lines, capping off a tumultuous year for exporters who have faced dramatically increased freight costs while raw materials prices, especially semiconductors, have skyrocketed because to the two-year-long epidemic.
According to Micron, the restrictions might create delays in the supply of DRAM memory chips, which are commonly used in data centres.
The rigorous limits, which took effect earlier this month, may be more difficult to counteract and have resulted in lower personnel numbers at the production facility, according to Micron.
Samsung Electronics also said that it would temporarily change operations at its Xian NAND flash memory chip production facilities, which are used for data storage in data centres, cellphones, and other digital gadgets.
According to Chinese media outlet Yicai, Samsung’s Xian semiconductor factory is currently operational.
According to TrendForce, Samsung’s Xian facility is operating normally for the time being, and raw material supplies are enough, although output may fall somewhat if the pandemic is not contained.
“The impact on global supply is manageable, but there are uncertainties,” said Yan Chengyin, a consultant and manager at Beijing-based Bayes Consulting.
“The unknown is how fast the virus’s spread can be halted and factories can resume normal operations. Clusters of instances, in our experience, will be under control in China very soon. In addition, I believe the local government would strive to encourage huge international corporations such as Samsung.”
According to Seoul-based experts, chips manufactured at Samsung’s Xian NAND unit are mostly shipped to China, with only a few exports to other countries.
They stated that Chinese server businesses have a high demand for the type of chips manufactured in the factory.
TrendForce stated that any changes in operations at the Xian production site may have a direct impact on smartphone and notebook computer producers, but that Samsung’s relatively strong inventory level can serve buyers without any hiccups in the short run.
Chinese officials have put strict restrictions on movement within and out of Xian beginning December 23, as part of Beijing’s effort to suppress outbreaks as soon as they arise.
The Covid-19 epidemic in Xian is the largest in any Chinese city this year, with over 1,100 cases reported during the most recent outbreak.
“We are using our worldwide supply chain, including our subcontractor partners, to assist service our customers for certain DRAM products,” Micron wrote on its blog.
“We anticipate that these efforts will allow us to satisfy the majority of our customer demand,” the business added. “However, there may be some short-term delays while we activate our network.”
Micron also stated that it was attempting to reduce the risk of viral transmission by implementing measures like as physical separation and on-site testing, as well as advocating immunisation.
One of China’s major foreign ventures is Samsung’s memory chip factory in Xian.
According to TrendForce, the tech giant has two manufacturing lines in Xian that produce sophisticated NAND Flash products, accounting for 42.5 percent of its total NAND flash memory production capacity and 15.3 percent of worldwide output capacity.
In January, Samsung is likely to release its earnings for the period October to December.