Samsung Electronics Reduces Production Lines at Semiconductor Plant in Xi'an, China... "Flexible Operation" (Comprehensive)

City Lockdown Restricts Workforce and Material Movement... Production Adjustment Inevitable
Samsung Electronics NAND Production Up 40%, May Increase Price Volatility

Samsung Electronics semiconductor factory in Xi'an, China (Photo by Samsung Electronics)

[Asia Economy Reporter Lee Hye-young] Samsung Electronics has begun adjusting production volumes, including partially scaling down the semiconductor production lines at its facility in Xi'an, China, where a city lockdown order has been imposed due to the spread of COVID-19. There are also expectations that Samsung Electronics' production adjustments could affect the future price volatility of NAND flash memory.

On the 29th, Samsung Electronics stated, "As the spread of COVID-19 continues, we are flexibly adjusting the production lines at our semiconductor facility in Xi'an, China." The company added, "This is in accordance with our management policy that prioritizes the safety and health of our employees," and explained, "We will do our best to ensure there is no disruption to customer service by preparing multifaceted measures, including linking global production lines."

Following the lockdown order issued on the 22nd, which effectively restricted the movement and outings of 13 million residents, most factories in Xi'an ceased operations. However, Samsung Electronics' factory has maintained normal operations under special measures by the Chinese authorities, considering the characteristics of the semiconductor industry.

During the first week after the lockdown, Samsung Electronics minimized the impact by deploying personnel residing in dormitories and available resources to the fullest extent, but as the situation entered a prolonged phase, partial scaling down of production lines became inevitable.

The streets of downtown Xi'an, China, which has been completely locked down due to the spread of COVID-19, are empty.
[Image source=Yonhap News]

Samsung Electronics' only overseas memory production bases, Xi'an Plants 1 and 2, are known to produce NAND flash at a scale of 250,000 wafers per month. This accounts for 42.5% of Samsung Electronics' total NAND flash production and 15.3% of global production.

According to market research firm Omdia, Samsung Electronics held an overwhelming 34.5% share of the global NAND flash market in the third quarter of this year, so the impact of production adjustments at the Xi'an plant could be even greater.

Industry experts predict that the reduction of production lines at the Xi'an plant could increase price volatility. Earlier, semiconductor market research firm TrendForce commented on the Xi'an lockdown situation, stating, "Samsung Electronics has cleared most of the memory semiconductor shipments from the Xi'an plant from the end of this year through mid-January next year," but also explained, "If logistics and other issues caused by the prolonged lockdown lead to shipment delays, the decline in NAND flash memory prices may narrow."

A Samsung Electronics official said regarding the measures at the Xi'an plant, "Due to difficulties in logistics and personnel movement, we have no choice but to operate flexibly by adjusting production volumes," and added, "We will conduct multifaceted reviews, including linking production lines such as those in Korea, to ensure there is no disruption in semiconductor supply."

This content was produced with the assistance of AI translation services.