The Arctic weather passing through Texas threatens to exacerbate a global shortage of semiconductors, after several manufacturing plants near Austin were forced to close.
Austin’s local energy provider has asked all large-scale manufacturers to reduce or shut down operations during the storm, thus giving preference to customers in the homes and healthcare. The area around the state capital is home to several high-tech manufacturers, attracted by a combination of local talent and low taxes in Texas.
One of the region’s largest semiconductor manufacturers, Samsung Electronics, said on Tuesday it had stopped operations at its billion-dollar manufacturing plant in Austin without resuming production.
NXP and Infineon, two major suppliers to the automotive industry, have confirmed that they have also closed their Austin plants.
The closure comes because carmakers have already been forced to limit production due to component shortages around the world.
“It will undoubtedly have an impact on an already large shortage of chips,” said Ben Bajarin, an analyst at Creative Strategies.
Last week’s historic storm claimed at least 23 lives in the southern United States and left millions without power. The grid in Texas was particularly hard hit, both by the extra demand in light of record-breaking cold and the reduced supply, as some power plants went offline.
As the icy temperature continues, Austin Mayor Steve Adler on Tuesday told residents of the capital of Texas to use torches and candles, even if they have power. In light of the major eclipses, Austin Energy has urged some industrial users in the area to halt production.
Samsung has confirmed the shutdown at the processor disk foundry. The South Korean electronics group was in talks about expanding manufacturing in Texas with a new $ 17 billion plant.
“Due to the recent disruptions in Texas, Samsung Austin Semiconductor gradually discontinued operations at around 1pm on February 16, as ordered by Austin Energy,” Samsung said. “With prior notice, appropriate measures have been taken for the facilities and waffles that are in production. While production will resume once the power supply is restored, we are currently discussing the timing with the authorities. ”
If semiconductor manufacturing is shut down even for a short time, it could incur millions of dollars in losses due to the scale and complexity of the operations.
While chip production in the US is on a much smaller scale than the largest plants in Taiwan and South Korea, the timing of this week’s shutdown could not be worse for the industry, which has already struggled to increase supply. to provide in the reviving demand. The shortage of chips has slowed car production around the world and threatens to slow down the production of other forms of electronics, including smartphones.
Manufacturers in Austin were only notified for a few hours before the power outage to their high-precision production lines, which typically operate 24 hours a day, 7 days a week, was interrupted.
Infineon, which acquired a plant in Austin last year as part of its acquisition of Cypress Semiconductor, said the advance warning was just enough to ‘put the factory in a safe condition and protect our production stock’.
“For our critical safety systems, we use emergency generators,” a spokesman said. ‘We need to have a better idea [of the impact] in the next 24-48 hours. ”
Citi analysts said in a note to customers on Wednesday morning that a continuous power outage due to a prolonged freeze [Infineon’s] output of memory chips and could potentially exacerbate the broader limited situation in semiconductors.
NXP, which has two plants in Austin, said it was warning customers about the “potential for supply disruptions”.
“We are closely monitoring the situation and will resume operations at Austin facilities as soon as possible,” said David Reed, executive vice president of NXP.
Applied Materials, Qorvo, Flex and Texas Instruments are among the other companies manufacturing across the state.