China’s semiconductor value chain facing more disruption risk as Shanghai extends lockdown to residential area near its ‘Silicon Valley’
- A number of businesses inside the park have suspended operations as new cases of the Omicron variant of Covid-19 surge in Shanghai
- Big chip companies such as SMIC and Hua Hong say operations are running normally for now
China’s semiconductor supply chain is facing fresh risks after the local authority in Zhangjiang, known as Shanghai’s Silicon Valley, extended a strict lockdown in residential areas to contain an Omicron outbreak, following similar disruption in industrial hubs such as Xi’an, Suzhou and Shenzhen.
The Zhangjiang Town authority on Friday extended a strict lockdown for an unspecified length of period, after three rounds of mass testing were conducted in locked communities over the past week, according to a notice. While the lockdown does not cover the neighbouring hi-tech park where the factories and offices of China’s leading semiconductor firms are located, the residential area under restriction is popular with workers at the park.
Zhang Xiaonan, a Shanghai resident, said her father’s company inside the park has been under lockdown since Thursday, with all employees forbidden to enter the building until further notice. However, several key factories in the area have said they are managing to maintain production.
Hua Hong Semiconductors, which has a huge factory in Zhangjiang, said it has maintained full-scale operations. Semiconductor Manufacturing International Corp, China’s largest semiconductor manufacturer, told the Post on Friday that its factories in Shanghai were cooperating with the local government on Covid-19 prevention measures and that its production and operations remain normal.
Xie Ruifeng, a senior analyst with Shanghai-based semiconductor research firm ICwise, said that most fabs would not shut easily given that the potential impact on production could be huge.
In a previous lockdown in Xi’an, Samsung Electronics’ local semiconductor factory opted to maintain production, while in an earlier Suzhou lockdown, some companies were forced to suspend operations temporarily.