Chip Shortage May Worsen After Severe COVID-19 Outbreak In This Chinese City

The world is currently going through a global shortage of semiconductor chips and it may get worse after a serious COVID-19 outbreak emerged in the Chinese city of Xi’an.

On Wednesday, chipmakers Samsung and Micron announced that the outbreak is hurting their operations in the city, especially as local authorities begin to implement strict measures to contain the outbreak.

In a news release, Samsung said that it "temporarily adjusted operations" in Xi'an as it looks to protect its employees from the virus. It pledged to make use of its other manufacturing hubs to limit any damage to its customers.

Micron, based in Idaho, warned its customers that there may be "near-term delays" as it begins to shift its production operations to other areas of its supply chain. The company said that the measures implemented by the Chinese authorities had reduced their local workforce in Xi'an, but that it was in compliance with local prevention measures.

China is one of the largest suppliers of semiconductors in the world, but the COVID-19 pandemic has cut it into its ability to meet global demand for a component used in everything from smartphones to automobiles.

The cause of the outbreak in Xi’an is believed to have begun in early December, but it is uncertain exactly how it developed into an outbreak. Chinese officials suspect it could be related to the large stream of tourists who visit the city after a case was detected at a hotel on Dec. 9, but they also suspect it began with an infected passenger from a flight that landed from Pakistan on Dec. 4.

Officials also have not yet specified whether this outbreak is related to the Omicron variant. The World Health Organization and other public health bodies warn that this strain is particularly contagious, but China has insisted it has only seen a handful of cases of Omicron to date.