Samsung’s Xian chip plants hit by Covid-19 lockdowns as tech giant moves to minimise impact

Samsung said essential workers in Xian are remaining on site and that it is working to ensure customers are not affected
The company’s two plants in the city make up 15 per cent of global NAND flash production capacity

Samsung Electronics

Che Panin Beijing

Published: 1:07pm, 29 Dec 2021

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Large chip-making facilities belonging to South Korean technology giant Samsung Electronics have been affected in the Chinese city of Xian amid rigid local lockdown measures instituted to combat a fresh bout of Covid-19, as the government continues its zero-tolerance drive to contain the coronavirus.

Samsung will “temporarily adjust operations” at its plants in the city, the company said in a statement on Wednesday. It will “take all necessary measures”, it added, including using factories in other locations to ensure customers are not affected. Protecting the health and safety of its more than 3,300 employees in Xian is the company’s top priority, it said.

Samsung has two memory wafer fabrication plants in Xian, where it produces 3D NAND flash products. The company did not specify how the plants were affected, and did not immediately respond to requests for comment on Wednesday.

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Samsung issued the statement after media reports that its plants had to take emergency measures, including requiring essential workers to stay in on-site dormitories in case lockdowns continue. Reports also said the company was consulting Chinese authorities on how to continue production.

Last Friday, a Samsung representative told South Korean news outlet Yonhap that emergency measures in Xian had “not affected production” because of workers living on the corporate campus.

However, research firm TrendForce warned in a report last week that Samsung “could face logistical issues related to the Xian lockdown in the near future and experience delays in shipments”.

Xian has been in a government-mandated lockdown for the last week, as Covid-19 cases have been rapidly climbing in the capital of China’s central Shaanxi province. Residents have been told not to leave their homes, and some have posted on the microblogging platform Weibo that they had trouble getting daily supplies. Control measures intensified on Sunday, when roads, buildings and other open spaces across the city of 13 million were covered in disinfectant sprayed through the air.

Samsung has emerged as an important semiconductor producer amid a global chip shortage this year. The Seoul-based company opened its first Xian plant in 2014, and the second began operating in March of last year. Both have been praised by the government as important contributors to the local economy.

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The combined output of the Xian plants accounted for 42.5 per cent of Samsung’s total NAND flash production capacity and 15.3 per cent of all NAND production globally, according to TrendForce data.

US memory chip giant Micron, which runs a DRAM assembly and test site in Xian, also said in a statement that it is “working with local government officials to identify solutions” that will enable it to continue operations at its facility. It is working with suppliers and partners to minimise the impact on delivery schedules, Micron added.

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