Samsung's Chip Production In China Disrupted Due To Truck Driver Strike In South Korea

JAKARTA - Samsung Electronics Co Ltd's chip production in China is facing disruption from a truck driver's strike in South Korea that has hindered exports of key materials. This was stated by the Korea International Trade Association (KITA) on Tuesday, June 14.

It is the first real sign that the week-long strike is impacting chip production, which has cost South Korea's industrial sector more than $1.2 billion in lost production and unfilled shipments.

KITA said a Korean company that produces isopropyl alcohol (IPA), a raw material for cleaning wafer chips, faced complications in shipping to a Chinese company which in turn supplies wafers to Samsung Electronics' factory in China.

KITA said in a statement that about 90 tonnes, or a week's worth of shipments, had been delayed.

Samsung Electronics did not immediately comment. It produces NAND flash memory chips, which are used for data storage in data centers, smartphones, and other technology gadgets, at its plant in Xian, China.

Reported by Reuters, the truckers' union said in a statement on Tuesday that it would continue the general strike and sued the transport ministry for being "unwilling to talk or unable to resolve the current situation".

Unions protested rising fuel prices and demanded guaranteed minimum wages. Four rounds of negotiations with the government failed to find a compromise.

Samsung's Xian factory experienced production disruptions earlier this year due to COVID-19 restrictions in Chinese cities, leading to a global rally in NAND prices.

The tech giant has two production lines in Xian that make advanced NAND flash products, which account for about 43% of total NAND flash memory production capacity and 15% of overall global output capacity, according to TrendForce.