Samsung to Adjust NAND Flash Production Manpower and Capacity Utilization

This market report was written on December 30, 2021 by Ben Yeh, analyst, TrendForce Corp.

Currently, the consequences of Xi’an’s lockdown on Samsung is weighted most heavily towards the difficulty of scheduling shifts for personnel.

Due to restrictions on movement and other lockdown measures, Samsung must continue operations with limited manpower. It is currently making active adjustments to reduce impact on output and the local government expects a return to normalcy within 1 to 2 weeks.

However, if the pandemic is not properly controlled, short-term impact on the production utilization rate of the local factory campus cannot be ruled out, resulting in a slight decline in output. As for raw materials required for production such as water and power, supply seems to remain sufficient, though the company is still confirming the specific degree of any impact.

Production has not been interrupted at its Xi’an plant, the company’s remedy is reduced operational scale which may affect utilization rate 
Following up on TrendForce’s previous press release, Samsung’s 2 major NAND flash fabs in Xi’an are still manufacturing without experiencing significant disruptions at this moment. However, with the local authority enforcing even stricter restrictions on the movements of people, Samsung has been compelled to perform some temporary operational adjustments to the 2 fabs. With respect to end-products, facilities in the Xi’an region are primarily responsible for the assembly of consumer electronics such as UFS and client SSDs, meaning changes in the Xi’an fabs’ operations will have a direct impact on the procurement activities of smartphone and notebook computer manufacturers. However, as Samsung’s inventory level is still relatively high, the company should be able to keep supplying these products to buyers with no issues in the short run, although the decline in the these products’ prices may moderate somewhat.

Judging by the performance of the NAND flash spot market on December 29, most suppliers have now stopped giving price quotes for NAND flash products after Samsung released an official statement on the Xi’an matter. Regarding the forecast of NAND flash contract prices for 1Q22, TrendForce will continue to closely monitor responses by Samsung as the pandemic progresses. If the lockdown continues, the decline in NAND flash contract prices may potentially see a further tapering.