Hello Sky,
I’m surprised you can say the problem occurs only during Location Update : during a Call Setup, the SDCCH phase is almost the same (Ciphering & authentication)
The problem you are describing is not a SDCCH assignment failure, but it is a SDCCH drop. So it is probably linked to a radio problem, such as interference or bad coverage, which occurs on the TRX that is carrying the SDCCH timeslot.
If the problem is only on this TRX and not on the others, then it is probably a faulty TRX.