Samsung's chip factory affected by Xian lockdown

Samsung Electronics' memory chip plant in Xian, China [SAMSUNG ELECTRONICS]

A spike in coronavirus cases in China’s Xian Province has forced Samsung Electronics to slow down its memory chip plant there.

The chipmaker noted the cut in production levels on its official website.
“Due to the ongoing Covid-19 situation, we have decided to temporarily adjust operations at our manufacturing facilities in Xi’an, China,” the Suwon, Gyeonggi-based company said in a statement.

“We will also take all necessary measures, including leveraging our global manufacturing network, to ensure that our customers are not affected,” it said.

The decision came as Chinese authorities tightened restrictions on people’s movements and business operations in Xian, the latest cluster in a recent resurgence of coronavirus cases. Case numbers in China remain relatively lower at under 200, but the majority of them are happening in Xian.

The lockdown was announced on Dec. 22 in line with China’s policy to immediately respond to outbreaks, even if the infection numbers are relatively tiny.

Started in 2014, the Xian factory is Samsung's only memory chip plant outside Korea, and is responsible for supplying about 40 percent of Samsung’s NAND flash memory products.

It announced an $8 billion investment in the Xian plant in 2019 to expand NAND flash memory production.

Analysts predicted delays in shipments as a result.

Samsung Electronics “could face logistical issues related to the Xian lockdown in the near future and experience delays in shipments,” said market tracker TrendForce in a report last Friday.

Financial losses are inevitable because when some kinds of production lines are halted, wafers being fabricated must be discarded.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]