Chinese anti-virus lockdowns add to concerns over economy

BEIJING (AP) — China’s lockdowns of big cities to fight coronavirus outbreaks are prompting concern about more disruptions to global industries after two makers of processor chips said their factories were affected.

That has added to unease about the omicron variant's global economic impact. Analysts warn Vietnam, Thailand and other countries important to manufacturing chains might impose anti-disease measures that would delay deliveries.

“Lockdowns in China are already causing disruptions,” economists at Nomura said in a report Friday.

The Chinese economy already was cooling under pressure from unrelated official efforts to force real estate developers and other companies to reduce surging debt that fueled China's boom over the past two decades.

The biggest city in China’s latest lockdowns is Xi’an, a metropolis of 13 million people in the west. It is less significant as a manufacturer than Wuhan, the central city that shut down in 2020 after the first coronavirus cases were spotted there. But Xi’an has factories that make processor chips for smartphones, auto parts and other goods for global and Chinese brands.

Samsung Electronics and Micron Technologies Ltd. say their factories in Xi’an are affected but they are trying to minimize disruptions by drawing on global production networks. Micron said some deliveries might be delayed.

Those factories make DRAM and NAND memory chips used in smartphones, personal computers and services.

Xi'an accounts for 42% of Samsung's NAND production and 15% of global supply, according to Shelly Jang of Fitch Ratings. Samsung makes about one-third of such chips.

The lockdown “will negatively affect NAND flash supply, if it is prolonged further,” Jang said in an email. The situation “adds more uncertainty” to supplies.

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