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Global Commodity Intelligence

Q2 2025 | APRIL - JUNE

Manufacturing Disruptions on the Horizon for Major Memory Suppliers

January 21, 2022

Covid lockdowns and regional protocols continue to force unplanned disruptions in the manufacturing facilities for Samsung and Micron located in China. For Samsung, these disruptions are from fabs based in Xi’an, China and will impact the production of NAND Flash. The gaps in production will affect factory output and potentially drive spot market pricing up.

Here are the Samsung factory disruption details:

Up to 40% of Samsung’s NAND Flash production capacity or approximately 15% of the total global production for NAND Flash supply is affected. The fabs have been running reduced production for the past two weeks and it’s likely the lockdown will continue for at least another two weeks.
Samsung Xi’an fab had excess finished goods inventory, so this lockdown gives them a chance to reduce inventory. This is a good reason why product and pricing has not been directly impacted in the market to date.
The Samsung Xi’an fab also produces mature technologies and the NAND chips are used on enterprise-grade SSDs. Continued disruption in manufacturing will also affect enterprise-grade SSD’s and consequently, potential price increases.

Other suppliers in the region such as Micron (SpecTek) for PC grade DRAM packaging lines have also been affected. The facility produces approximately 7% of the total global market share for these DRAMs. Micron used the opportunity to raise prices in early January approximately 4-5% by DRAM density.

End of year and January market conditions

Samsung reported some of their tier-1 clients canceled DRAM POs in Q4 2021 due to supply chain disruptions and shortages of other components. Now they are placing demand back on the factories.
Samsung and tier-1 PC makers are negotiating January DRAM/NAND contract prices. As both parties review the current market conditions, Samsung is aggressively trying to raise prices and the PC manufactures are pushing back. We’ll see where the tug of war ends and where the new price levels end up.
Due to the current Xi’an lockdowns, both Samsung and Micron may lose 3 to 4 weeks of production. Once the lockdowns ease, it could take a couple of weeks for them to re-ramp to full capacity, extending the shortages.

Current price trends

We are modifying some of the price trends recently reported in our Q1 2022 Procurement Intelligence Report. SSDs / BiCS4 (Kioxia) – the original forecast was for price decreased in Q1 with Q2 stable and increases in 2H 2022. The new forecast is Q1 stable or down very slightly, Q2 stable or up and 2H 2022 to be in the uptrend. BiCS4 / 5 delta is expected to increase by 10%+ in 2H 2022.
SSDs / MLC NAND - forecast unchanged. Stable with a chance to go up quarterly due to reduced/limited supplies.
DDR4 - original forecast was Q1 stable or down. New forecast is Q1 up, Q2 and the remainder of the year will remain for an uptrend in pricing. It’s primarily the result of short supply and DDR5 ramps.
DDR3 - forecast unchanged. Prices will continue to increase due to less capacity and supply.
In addition, DRAM spot market prices have been increasing since early December 2021. Spot pricing is an important indicator of contract pricing. For this reason, it’s very likely DRAM pricing will remain in the uptrend.

Recommended Actions

We recommend BUs consider taking Samsung and Micron deliveries early considering the lockdown, potential of supply disruptions and where we think pricing is heading.
We will continually monitor the situation in Xi’an and the impact to both Samsung and Micron production supply.

Please do not hesitate to contact me directly (brad_crouch@jabil.com) with any questions.

Brad Crouch, Global Commodity Manager