China for Samsung factories: world production trembles

Curiously, when only 4 days ago China boasted of having everything under control with the Omicron variant, today we find curious news to say the least: Samsung factories in China have to stop by government order due to the impact of the COVID-19 variant that has the whole globe in check. This means that the worldwide production of NAND Flash for SSD and RAM will be affected by more than respectable percentages. Will there be further upward price adjustments?

Earthquakes, tsunamis, hurricanes and now COVID-19. The Fabs of the big HDD and SSD manufacturers are always on everyone’s lips more than for their innovations in the sector due to the stops they have to suffer due to the devastation of nature or even the incidents that occur. Today it is Samsung that has suffered a stoppage that has as its protagonist the most famous virus in history and that is going to make its two Fabs stop producing.

42% of Samsung’s manufacturing thrown away by China

It is clear that the virus does not understand profits, euros or production, but at the beginning of the week China boasted of having everything under control through its interventionist and control policies for companies and the population. But “magically” cases appeared and everything has gotten out of control, which in just one week has forced a change to a much stricter control system.

With these premises, the government ordered the two factories of the Korean giant to comply with the urgent restrictions imposed, which means that according to Samsung itself, 42% of world production in NAND Flash could be lost.What the company will try is the most logical, not the most effective, but it has to move:

“We have decided to temporarily adjust operations at our manufacturing facility in Xi’an, China. This decision was made in accordance with our commitment to protect the health and safety of our employees and partners, which remains our top priority.”

“We will also take all necessary steps, including leveraging our global manufacturing network, to ensure that our customers are not affected.”

The problem is that these facilities represent the said 42% of the company’s production, so they will try to move the technical and human material to other Fabs outside of China to lose the minimum possible quota. The problem is the strategic blockade against the virus in the Asian country, which makes it almost impossible.

34% of global NAND Flash production

The latest analysts’ estimates stated that Samsung had acquired no less than 34% of the global production of these chips and logically that the internal production falls by 42% is a sign of alarm in the PC and server markets.

photo credit :trend force

The reasons are simple: in these Fabs the 136-layer NAND Flash and the new 176-layer NAND Flash were created, so components such as the 980 PRO will not be able to go on the market and it is more than likely that the DDR5 with the new B- chips Die of greater capacity and speed suffer a similar fate.

The most logical thing is that the stock runs out quickly (if there is any, because DDR5 for example is an impossible task) and with it the price enters pure speculation and rises quickly. There is no date for the total or partial reopening of the Fab, and knowing China and its management, what is certain is that it will not last long because, as in the rest of the world, infections are saturating health systems. The funny thing is that China was the first to suffer the original COVID-19 and is now the last to do so with the Omicron variant, which will make more companies consider leaving given current conditions.

Let’s not forget that China uses its own vaccine, which is the least effective against Omicron, so it is a complicated scenario that could spread to other Fabs from different companies as the virus spreads.

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