The city of Xi’An, the former capital of the Middle Empire under several Chinese dynasties, has been hit hard by a resurgence of Covid-19 contamination, which has led authorities to confine it. The problem is that the city is a hotspot for the production of memory modules.
Micron produces a large amount of its DRAM (random access memory) there, and Samsung no less than 42.5% of its NAND memory (SSD flash memory)! Samsung being the leader in this segment, this represents 15.3% of the global production of this precious memory, which can be found in smartphones as well as computers, tablets or cars.
For now, Micron and Samsung continue to produce normally, since their stocks of raw materials are sufficient. But the two companies have warned that if the epidemic, which has already caused 1,100 hospitalizations, is not controlled, a slowdown in their activities is to be expected.
If this were just an isolated event, this slowdown would quickly catch up. The problem is the current context of scarcity. In addition to Covid-19, this year we had to count on power outages in the USA (Samsung factory), and fires at Japanese chemical suppliers.
Coupled with the rush for electronic products — containments, the launch of new consoles, the growing computerization of automobiles, etc. — This additional imbalance in the supply chain should be painless in the days to come, with analysts deeming Samsung’s stock sufficient. But it could have a huge impact if the contaminations do not stop quickly in the Chinese city.