Quarantines in China are affecting Samsung and Micron chip production, we could see price impacts

The new restrictions brought about by the Omicron variant could complicate the operations of Samsung and Micron in the Chinese city of Xian. LThe city’s 13 million residents were placed under strict quarantine last week due to an increase in positive COVID-19 cases, leaving only essential services such as supermarkets and hospitals open, and therefore forcing factories to close indefinitely.

Samsung assures that in the short term consumers should not be affectedBut concerns are also raised about the impact this measure will have on global NAND supplies and prices if restrictions are extended.

This action was taken in accordance with our commitment to protect the health and safety of our employees and partners, which remains our top priority.

We will also take all necessary steps, including leveraging our global manufacturing network, to ensure that our customers are not affected.

The new restrictions affect two Samsung facilities that employ more than 3,300 people and process 250,000 wafers per month. This represents 42.5% of Samsung’s NAND production, and 15.3% of total global NAND production. Samsung is the world’s largest producer of NAND and has a 34.5% market share. In any case, the company ensures that it has enough stock to supply its customers until the middle of next month, so there should be no problems if the quarantine is not extended and everything returns to normal in a few weeks.

Many analysts reaffirm what Samsung has said and consider that this measure will not have a significant impact on the global supply and prices of NAND memories, although again they warn that this could change if the restrictions are prolonged.

On the other hand, Micron also has facilities in Xian City that were affected by the current restrictions. Reduction of staff and contractors affect the throughput levels of DRAM assembly and test operations, though like Samsung, Micron will also leverage its global network to make up for the situation.

We are leveraging our global supply chain to help supply our customers with these DRAM products. We project that these efforts will allow us to meet most of our clients’ demand. However, there could be some short-term delays as we activate our network.

The restrictions are expected to last a maximum of two weeks and have minimal impact on the price of DRAM and NAND products. Everything It will depend on the measures taken by the local government not being extended any longer than planned, as this could further worsen the current global chip shortage. Recall also that Micron stated that the shortage of components will cause the low stock of DDR5 to last at least until the second half of 2022.

Do you think these closures at the Samsung and Micron factories could have an impact on the stock and prices of NAND memories?

Source: Techspot