NAND Prices May Go up
Samsung Electronics has decided to scale down production of NAND flash at its plant in Xian due to the Chinese city's COVID-19 lockdown.
On Dec. 29, Samsung Electronics released a statement on the COVID-19 situation in Xian, China. “Due to the ongoing COVID-19 situation, we have decided to temporarily adjust operations at our manufacturing facilities in Xi’an, China," the Korean semiconductor giant said in the statement. “This decision was made in accordance with our commitment to protecting the health and safety of our employees and partners, which remains our top priority. We will also take all necessary measures, including leveraging our global manufacturing network, to ensure that our customers are not affected."
The city government of Xian issued the lockdown on Dec. 22. All highways leading to the city have since been blocked and citizens are told to stay inside the house and are only allowed to go out to purchase groceries.
Samsung Electronics’ Xian Plants 1 and 2 account for 42.5 percent of the company's total NAND production volume, according to market research firm TrendForce. The volume amounts to 15.3 percent of the world’s NAND production. V-NAND flashes of a three-dimensional structure are being mass-produced at the second plant.
“Samsung has already produced most of the products which are scheduled to be shipped from the end of 2021 to mid-January next year,” TrendForce said. “But logistics problems caused by the lockdown may delay the delivery of the products and procurement of raw materials.”
The possibility of NAND prices going up in the future cannot be ruled out. NAND spot prices were previously expected to fall 10 percent to 15 percent in the first quarter of 2022 as both buyers and sellers have considerable NAND inventory, according to TrendForce. However, analysts say the blockade is likely to slow the drop in NAND prices in the first quarter.
Micron is also expected to suffer from the lockdown of Xian. The U.S. chipmaker operates a semiconductor post-production process (packaging and testing) plant in the city. “The capacity of Micron’s Xian fab accounts for a small proportion of its total volume,” TrendForce said. “But this blockade is expected to affect spot prices of DRAMs in the short term.”