Samsung and Micron warn that lockdown in Xian could affect chip manufacturing

Samsung and Micron, two of the world’s biggest memory chip makers, have warned that tight restrictions against Covid-19 in the Chinese city of Xian could disrupt their chip-making sites in the region.

The city’s lockdown increases pressure on global supply chains and contributes to a torturous year for exporters facing much higher freight costs, as well as prices for raw materials, including semiconductors, soaring amid the two-year pandemic .

The restrictions could cause delays in the supply of DRAM memory chips, which are widely used in data centers, Micron said on Wednesday (29).

The restrictions, which took effect earlier this month, could be increasingly difficult to mitigate and have resulted in lower staffing levels at the manufacturing site, Micron added.

Samsung’s semiconductor facility in Xian is operating normally, Chinese media group Yicai reported on Thursday.

Analytics provider TrendForce also said Samsung’s Xian plant is producing without significant disruptions for the time being and the supply of raw materials seems sufficient, but there could be a slight decline in production if the pandemic is not brought under control.

TrendForce said smartphone and notebook makers could be directly affected by any changes in operations at Xian’s production base, but noted that Samsung’s relatively high inventory level could serve buyers smoothly in the near term.

Chinese authorities have imposed restrictions on travel in and out of Xian from 23 December, in line with the Chinese government’s initiative to immediately contain the outbreaks as they arise.

“We are exploring our global supply chain, including our subcontractor partners, to help serve our customers for these DRAM products,” Micron said in a post.

The company added that it is working to minimize the risk of transmitting the virus and has been employing measures, including physical distancing and on-site testing, and is encouraging vaccination.