Due to Ongoing Power Shortage in China
Global supply chain instabilities are increasing to the point of potentially affecting South Korea’s semiconductor production. The ongoing power shortage in China is already affecting South Korean companies in China along with logistics setbacks.
At present, Samsung Electronics is running two NAND flash fabs in Xi’an, China. The facilities account for 40 percent of the company’s total NAND flash production. SK Hynix has a DRAM fab in Wuxi, which accounts for 10 percent of its total DRAM shipments. Concerns over the operation of the facilities are growing due to the nationwide power shortage.
The shortage is affecting semiconductor material supply as well. It many cases, raw chemicals for semiconductor production are imported from China and processed. These days, the supply is becoming increasingly tight with the Chinese government controlling the supply of electricity.
The examples include yellow phosphorous, which is an essential component of NAND flash manufacturing. China, which accounts for 50 percent of the global yellow phosphorous production volume, has slashed the production since last month, and the price of the chemical is surging.
Besides, the SoC shortage that occurred early this year is still affecting IT product supply chains and the global memory chip market as a whole. Micron Technology recently announced that its sales and operating profit for September to November are estimated at around US$7.65 billion and US$2.7 billion, respectively. The estimates are 8 percent lower than market estimates.
Experts point out that the surge in demand triggered by COVID-19 is subsiding and this may additionally affect the global semiconductor supply chains as well as South Korean manufacturers in the fields including semiconductor packaging, display panel manufacturing, MLCC production, and so on. “The supply chain based on the division of labor is being shaken to its very foundation and South Korea needs to make more efforts for procurement from within and supply chain efficiency enhancement,” the Korea Economic Research Institute commented.