Samsung confirms coronavirus case at chip factory – Financial Times

Samsung has reported its first coronavirus infection at one of its chip factories as the fallout from the pandemic reshapes global technology supply chains.

The South Korean technology group confirmed on Tuesday that an employee at one of its computer chip manufacturing facilities near Giheung, south of Seoul, had tested positive for coronavirus.

Production at the plant has continued but a group of staff who were in contact with the infected person are self-isolating, a spokesperson said.

Samsung is the world’s largest producer of computer chips, smartphones and electronic displays. Analysts have warned that any substantial disruption to Samsung’s chip production could wreak havoc on the South Korean economy and global supply chains.

According to a person familiar with the situation, the infected employee worked on a semiconductor foundry line producing system chips. Health officials are assessing how the employee contracted the virus.

South Korea’s technology and industrial groups including Samsung, Hyundai, SK and LG have been under intense pressure since reports of the virus outbreak in January.

They grappled with initial problems caused by falling Chinese demand and supply shortages stemming from sweeping shutdowns as Beijing struggled to contain the virus, which originated in the central Chinese city of Wuhan. Last month, South Korean industrial output contracted at its quickest clip since the global financial crisis, according to official data released on Tuesday.

Now as the pandemic causes consumer spending to collapse in key developed markets including the US and Europe, the groups face rising uncertainty over the level of demand for new products from export-dependent South Korea.

CW Chung, head of research at Nomura in Seoul, said that while the country’s tech groups had introduced measures to prevent the virus affecting production, “major disruptions” could not be ruled out.

Mr Chung added that tighter travel restrictions also pose problems for plans to upgrade and expand facilities across the region.

“Engineers [from Samsung and SK Hynix] need to go to the US and Japan to buy new equipment and then install the equipment in their Chinese plants, as the companies plan to expand their chip investments in China this year,” he said.

The case at Giheung is also a worry for Samsung given its insistence for several months that its chipmaking facilities were unlikely to face disruption because the plants are highly automated, its factory environments are tightly controlled, and there are strict sanitisation measures in place. That contrasts with smartphone and appliance factories, where human assembly work is more common.

The case at the chip plant follows several temporary closures at other Samsung factories including facilities making smartphones.

The news came as Samsung’s display affiliate confirmed on Tuesday that it would stop production of all liquid crystal display screens by the end of the year.

Samsung Display, which has LCD production lines in South Korea and China, has been hit by overcapacity. The company last year signalled plans to accelerate efforts to shift to organic light-emitting diode (OLED) displays as it tries to compete with LG Display in the growing market for large television panels.

Editor’s note

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