TECH: Lockdown in the city of Xi’an in China threatens the global production of memory.

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.