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Samsung’s Chip Biz Faces Minimal Impact From Chinese City Lockdown

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The prolonged lockdown in the Chinese city of Xi’an will have minimal impact on the performance of Samsung Electronics, which has a chip fabrication complex there, analysts said on Wednesday.

Samsung Electronics has invested more than $25 billion in the Xi’an manufacturing complex.

Samsung, the world’s largest memory chip maker, temporarily adjusted operations at its NAND flash chips manufacturing base in the city late last month, following the city’s draconian restrictions imposed on December 22, banning its 13 million citizens from venturing out and doing nonessential activities, to stem the spread of the coronavirus.

The Xi’an manufacturing complex is Samsung’s only overseas facility that produces NAND flash memory chips, reports Yonhap news agency.

“The event will have minimal impact on the global supply of NAND flash chips for the time being thanks to Samsung’s own inventory as well as those of other channels,” Doh Hyun-woo, an analyst at NH Investment & Securities wrote in his report.

He added that it will likely drive up NAND prices in the second half when the current stock begins to run out.

Song Myung-seop, another analyst from DGB Financial Group, said the average selling price (ASP) of NAND chips is predicted to “fall less than previously expected, partly due to the supply shortage.”

The Xi’an event is forecast to “help stabilise NAND prices” and eventually boost Samsung’s chip business to log “record earnings this year,” said Eo Kyu-jin from DB Financial Investment.

Industry tracker TrendForce had previously said NAND flash ASP would decline 10-15 percent in the first quarter of this year due to oversupply.

According to TrendForce, Samsung was the world’s biggest NAND flash provider with a 34.5 percent of market share in the third quarter of last year. NAND flash is a type of non-volatile storage that does not require power to store data.


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