Samsung, Micron warn COVID-19 lockdown in Chinese city may impact chip production

The companies said the stringent lockdown in Xian, where Micron's DRAM and Samsung's NAND memory chips are manufactured, could lead to delays.

Samsung Electronics and Micron Technology, two of the world’s largest memory chip makers, warned that strict COVID-19 curbs in the Chinese city of Xian could disrupt their chip manufacturing bases in the area.

The lockdown in the city puts further pressure on global supply chains and adds to a torturous year for exporters facing sharply higher freight costs even as prices for raw materials including semiconductors skyrocket amid the pandemic.

The curbs could cause delays in the supply of DRAM memory chips, widely used in data centers, Micron said on Wednesday.

The stringent restrictions, which went into effect earlier this month, may be increasingly difficult to mitigate and have resulted in thinner staffing levels at the manufacturing site, Micron added.

Samsung Electronics also said on Wednesday that it would 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.

Seoul-based analysts said chips made in Samsung’s Xian NAND plant mainly go to China with limited shipments heading overseas. Some of the biggest demand for the kind of chips made in the plant come from Chinese server companies, they added.

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.