February 3, 2020 / 4:48 AM / 21 days ago

Huawei, Chinese chip makers keep factories humming despite virus outbreak

SHANGHAI (Reuters) - Some technology firms in China have maintained operations to manufacture parts and products despite government calls in various cities and provinces for companies to halt work to help stop the spread of a new coronavirus.

The Huawei logo is seen on a communications device in London, Britain, January 28, 2020. REUTERS/Toby Melville

Chinese telecom giant Huawei Technologies Co Ltd said on Monday it had resumed production of goods including consumer devices and carrier equipment, and operations were running normally.

The company restarted manufacturing after the Lunar New Year holiday in line with a special exemption that allows certain critical industries to remain in operation, despite Beijing’s call to halt all work in some cities and provinces.

The spokesman said most of the production was in , a city in the southern province of Guangdong.

Various provinces and cities in China have called for factories to halt work, though companies in certain industries can remain in operation while others can apply for an exemption

A notice in Shanghai, for example, says that business involved in producing food supplies, medical supplies or sectors relevant to the national economy.

Other companies have also kept production running, in some cases even through the New Year, in a sign of the critical importance Beijing places on its domestic tech supply chain, a subject of friction with the United States

Yangtze Memory Technologies Co Ltd (YMTC), a state-backed maker of flash memory chips based in Wuhan - the city where the virus outbreak began - confirmed that it had not ceased production.

“At present, production and operations at YMTC are proceeding normally and in an orderly manner,” a company spokesman wrote in a statement.

The spokesman said no employees had been confirmed as infection cases, and the company had enacted certain isolation measures and partitions to ensure the safety of employees.

State media reported that the chip maker did not cease operations over the Lunar New Year holiday.

Meanwhile, Semiconductor Manufacturing International Corp (SMIC) also kept production running through the holiday break.

In a post on social media, the company said it organised a work group before the holiday to ensure plants could stay open, while protecting the safety of employees and adhering to government regulations.

“SMIC needs to ensure that factory production runs 365 days a year and 24 hours a day to meet customers’ fabrication needs,” the company said in the post.

The company, which rivals Taiwan Semiconductor Manufacturing Co, has facilities in Tianjin, Shenzhen, Beijing, and Shanghai.

Nina Kao, TSMC’s spokeswoman, told Reuters that the company currently “maintains partial operation” in China and it plans to resume full operation on Feb 10.

POSSIBLE DELAYS

TCL Corp, makers of display panels and televisions, said on Monday that while the lines at its China Star Optoelectronics Technology Unit (CSOT) for LCD screens “operate non-stop all-year round,” its Wuhan factories can expect delays in manufacturing materials supply.

BOE Technology Group Co Ltd, another Chinese maker of displays, told state media outlet Global Times that one of its plants at Wuhan had encountered a supply shortage due to amid the virus.

Research firm TrendForce, which tracks the global memory sector, reported that plants at Changxin Memory Technologies Co Ltd (CXMT), based in a city close to Wuhan, and Xinxin Semiconductor Manufacturing Co Ltd, another memory company based in Wuhan, were continuing their operations.

The two companies did not immediately respond to emailed requests for comment.

Overseas parts makers with factories in China have also continued production.

Samsung Electronics has not seen a production disruption at its chip factory in Xi’an despite the coronavirus outbreak, two people familiar with the matter told Reuters.

They did not give further details.

A Samsung Electronics representative confirmed that the plant had been running as usual, saying production had not stopped during the Lunar New Year holiday.

Representatives of Samsung Display, SK Hynix and LG Display also said they were running their Chinese factories as usual.

DRAMexChange wrote in a research note that it expected the virus to have no immediate impact on memory prices, though it could delay planned expansions for some companies.

However, one Samsung source said the virus could still affect supply and demand.

“It is common sense that if the situation is prolonged, that it will hurt the industry. But I don’t know how long it will last,” the company source told Reuters.

(Refile to add missing word in paragraph 19)

Reporting by Josh Horwitz and Brenda Goh in Shanghai; Heekyong Yang and Hyunjoo Jin in Seoul; Editing by Kenneth Maxwell, Robert Birsel and Louise Heavens

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