Samsung Cuts Chip Output at Xi'an Plant Amid Fresh Lockdown

Samsung has cut chip output at its semiconductor plant in Xi'an, China, which went into lockdown due to a resurgence of coronavirus infections. Market watchers fear that a prolonged output reduction there could impact the already strained global market.

"We are flexibly adjusting assembly lines at our semiconductor plant in Xi'an, China due to a continued spread of the coronavirus," Samsung said on its website. "This is in accordance with the company's policy that top priority must be placed on the health and safety of our employees."

A Samsung staffer said, "We tried our best by putting our staff up in a nearby hotel, but some of them had to be placed in isolation and raw materials supplies also faced glitches, making it necessary to adjust assembly lines."

Samsung did not specify how much output will be cut. All expressways in and out of Xi'an have been sealed since last Thursday and the entire city is in hard lockdown. Heightened curbs were imposed on Monday prohibiting people from leaving their homes with only deliveries allowed. The measures have forced most factories in the city to close, but Samsung's plant kept running because a single stoppage leads to massive losses.

Xi’an is home to Samsung's sole overseas semiconductor plant and manufactures 250,000 wallpaper-sized sheets of NAND flash chips a month. According to market tracker TrendForce, that accounts for around 40 percent of Samsung's total NAND output and about 15 percent of global supply.

TrendForce predicts the production halt will affect NAND prices in the first quarter of 2022, but Samsung said it will try to make up for potential shortages by ramping up output at its Korean assembly lines.

But Samsung SDI's battery plant in Xi'an continues to operate as normal.