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Semiconductors

Samsung cuts NAND output in Xian on COVID-19 lockdown

The market expects a limited impact on supplies and pricing unless the lockdown is drawn out

By Dec 29, 2021 (Gmt+09:00)

Samsung's chip plant in Xian
Samsung's chip plant in Xian

Samsung Electronics Co., the world’s largest NAND flash memory chipmaker, said on Wednesday it is adjusting operations at its manufacturing facilities in Xian due to the lockdown of the Chinese city following a resurgence of the COVID-19 pandemic.

The company didn’t specify the volume to be affected, but its output reduction could impact NAND supplies to the global market and pricing, depending on the duration of the lockdown, industry watchers said.

The decision “was made in accordance with our commitment to protecting the health and safety of our employees and partners, which remains our top priority,” Samsung 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.”

China's Xian in lockdown due to the resurgence of the COVID-19 pandemic
China's Xian in lockdown due to the resurgence of the COVID-19 pandemic

The move comes after China’s health authorities last week imposed a strict lockdown in Xian to contain the pandemic.

Currently, Samsung runs two NAND flash memory plants in Xian – the first one built in 2014 and the other went into operation in March last year. The two factories can process a combined 250,000 wafer sheets a month.

The output from the Xian plants accounts for 42.5% of Samsung’s total NAND production globally.

LITTLE IMPACT UNLESS LOCKDOWN DRAWN OUT

According to market tracker TrendForce, Samsung is the world’s top NAND maker with a 34.5% market share as of the third quarter. NAND products from its Xian plants account for 15.3% of the global NAND output.

NAND flash chips produced at the Samsung plant in Xian
NAND flash chips produced at the Samsung plant in Xian

Analysts said Samsung’s output adjustment likely won’t have a significant impact on global NAND supplies or pricing unless the lockdown is drawn out.

Samsung already has stock ready to satisfy customers until mid-January, and there are significant inventories of NAND held by both spot buyers and sellers, according to TrendForce.

The NAND spot market will remain subdued into the first quarter of next year, it said.

On Seoul’s main stock market, Samsung Electronics closed down 1.9% at 78,800 won on Wednesday, underperforming the broader benchmark Kospi index’s 0.9% fall.

Write to Hyung-Suk Song at click@hankyung.com

In-Soo Nam edited this article.
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