Xi'an epidemic affects the global chip supply chain Micron Samsung Nvidia is implicated

As an investment and production center for high-tech enterprises, Xi'an has gathered a large number of technology companies, including chip companies. Since Xi'an announced the epidemic prevention and control measures, on December 29, global semiconductor giant Micron technology (Micron) issued a statement in response to the impact of the Xi'an blockade on chip production and delivery. Samsung also issued a statement on the same day, announcing a temporary adjustment to the operation of its manufacturing plant in Xi'an, China.

According to the data previously released by the Shaanxi Semiconductor Industry Association, in 2020, the scale of the manufacturing industry in Xi'an integrated circuits will reach 76 billion yuan, ranking first in the country, the output value of chip design is 14 billion yuan, ranking sixth in the country, and the output value of chip packaging and testing is about 12 billion yuan, ranking fourth in the country.

Micron said it fully complied with the xi'an government's lockdown measures that took effect on December 23, 2021. "Our priority is the health and safety of our team members, contractors and the wider community." The company wrote in a statement.

Micron Technology is the world's leading manufacturer of memory chips, second only to South Korean giants Samsung and SK Hexly, whose main products include DRAM and NAND memory chips. The company said that the decline in labor density at Micron's Xi'an plant due to the lockdown has had some impact on the production level of the assembly and testing business of DRAM chip products at the Xi'an plant, including delivery delays.

"We are working with suppliers facing similar challenges in the region, and we are also working with local governments to identify solutions that will allow us to minimise the impact and safely maintain plant operations to ensure that the impact on delivery schedules is minimized." The statement said.

Micron said it is leveraging the company's global supply chain, including subcontractor partners, to do its best to provide customers with DRAM products and meet the needs of most customers, but the company warned of possible network delays in the near future.

The surge in demand in the DRAM market has driven the rapid growth of Micron's business, which comes from the growing demand for smart cars and consumer electronics. The price of DRAM has risen sharply this year, and Xi'an's strict control measures have also added pressure to the already tense chip supply chain.

Samsung's statement on the same day also said that in order to ensure the health and safety of employees and partners, it decided to temporarily adjust the operation of its manufacturing plant in Xi'an, China, and will take all necessary measures, including the use of a global manufacturing network, to ensure that customers are not affected.

As Samsung's only overseas NAND chip production plant, Samsung's two memory chips in Xi'an also declared a state of emergency last week, and the Xi'an plant provides Samsung with more than 40% of NAND products, accounting for about 15% of the global market supply. Optimistic about the urgent needs of the chip industry, in the first half of this year, Samsung added new investment in the Xi'an factory.

In terms of industrial chain transmission, a 10-K document submitted by GPU chip giant Nvidia to the US Securities and Exchange Commission on Wednesday triggered a market sell-off, and NVIDIA's stock price fell by more than 1% on the same day. According to the documents, Samsung is NVIDIA's semiconductor foundry, and investors are worried that Samsung's Xi'an factory may affect the supply of NVIDIA chips.

Sheng Linghai, an analyst at gartner, a research institute, told the first financial reporter: "The epidemic in Xi'an will definitely have an impact on the production of enterprises, but this impact may be exaggerated by the market, and the decline in NVIDIA's stock price may also be that the capital market has overdrawn the company's future growth." ”

An NVIDIA insider also told the first financial reporter that the fluctuations of US technology stocks in the past month are very large, the rise and fall of stock prices is also a normal phenomenon, and the global epidemic is also facing huge uncertainty, the factors affecting the stock price are complex, and it makes no sense to simply link the decline in NVIDIA's stock price with Samsung's Xi'an factory.

In the past two years, sporadic epidemics have occurred from time to time, and semiconductor manufacturers have a mature set of response methods. An industry insider told the first financial reporter: "Factories will generally have supporting production measures, including high-grade clean rooms, etc., so the fab can still produce 24 hours a day in a relatively closed environment, as long as the traffic is continuous, it can still be shipped, and the impact on the industry is relatively limited." ”