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Samsung, Micron warn China’s Xian lockdown could affect memory chip manufacturing -Breaking

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© Reuters. FILE PHOTO – The Samsung Electronic logo is seen in Seoul at the headquarters of Samsung Electronic, South Korea on April 4, 2016. REUTERS/Kim Hong-Ji/File Photo

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(Reuters) – Two of the largest memory chip manufacturers in the world, Micron Technology (NASDAQ) and Samsung Electronics (OTC) warned of an imminent COVID-19 lockdown that could impact their local chip production bases.

Micron warned Wednesday that delays could occur in DRAM memory chip supply. They are commonly used in data centre operations.

According to the company, it said that tighter restrictions had been in place earlier this month and may make it more difficult for them to be removed. This has led to a reduction of staffing at the manufacturing facility.

Samsung Electronics (KS:) Electronics stated Wednesday that the company will adjust temporarily operations at its Xian facilities for NAND Flash memory chips. This is used to store data in data centres and mobile devices.

Chinese officials have imposed severe restrictions on travel from and within Xian beginning Dec. 23, as part of Beijing’s push to stop outbreaks when they occur.

Micron wrote in a blog: “We tap our global supply chain including our subcontractor partnerships to help our customers for these RAM products.”

According to the company, “We expect that these efforts will enable us to satisfy most of our customers demand. However there might be some short-term delays while we activate our network.”

Micron said that they were working to prevent virus transmission. They had used measures like physical distancing or on-site testing.

Two production lines of Samsung in Xian produce NAND Flash products. These production lines account for 42.5% of Samsung’s total NAND Flash production capacity and 15.3% overall global output, according to TrendForce.

Analysts based in Seoul said that chips from Samsung’s Xian NAND Plant would mainly travel to China, with very limited shipments going to foreign destinations. Furthermore, the largest demand for the type of chips would be made by Chinese server companies.

Samsung announced in October’s earnings call that NAND chips inventory had dropped to July-September quarter. It stated that they plan on normalising inventory during the quarter. Expected to report October-December earnings results within January.

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