Arctic climate sweeping Texas is threatening to worsen the global semiconductor shortages after several factories near Austin were forced to close.
Austin’s local power supplier has He asked all major manufacturers to reduce or close operations during the storm to prioritize residential and healthcare customers. 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 biggest semiconductor producers, Samsung Electronics, said it halted operations at its multi-billion dollar plant in Austin on Tuesday, without a clear timetable for resuming production.
NXP and Infineon, two key suppliers to the automotive industry, confirmed that they also closed their plants in Austin.
The closings are due to the fact that automakers have already been forced to reduce production due to the scarcity of components worldwide.
“This will undoubtedly have an impact on the already great chip shortage,” said Ben Bajarin, an analyst at Creative Strategies.
Last week’s historic storm claimed at least 23 lives across the southern United States and left millions without power. The Texas power grid was hit particularly hard, both by extra demand in the face of record cold and reduced supply, as some power plants were shut down.
As the freezing temperatures continued, Austin Mayor Steve Adler told residents of the Texas capital on Tuesday to use torches and candles even if they had power. In the face of widespread blackouts, Austin Energy told some industrial users in the area to suspend production.
Samsung confirmed the closure of its processor chip foundry. The South Korean electronics group was in discussions about expanding its manufacturing in Texas with a new $ 17 billion plant.
“Due to the recent blackouts in Texas, Samsung Austin Semiconductor gradually stopped operations around 1:00 pm on February 16, as requested by Austin Energy,” said Samsung. “With prior notice, appropriate measures were taken for the facilities and wafers in production. Although production will resume as soon as the power supplies are restored, we are discussing the moment with the authorities ”.
The closure of semiconductor manufacturing, even for a short period, can generate multimillion-dollar losses due to the scale and complexity of operations.
Although chip making in the U.S. is on a much smaller scale than the biggest factories in Taiwan and South Korea, the timing of this week’s shutdowns could not be worse for the industry, which has already struggled to increase supply to meet demand. resurgent demand. The chip shortage has slowed automotive production worldwide and threatens to delay the production of other forms of electronics, including smartphones.
Manufacturers in Austin were warned just a few hours in advance before power was cut off at their high-precision production lines, which normally operate 24 hours a day, 7 days a week.
Infineon, which acquired a plant in Austin as part of its purchase of Cypress Semiconductor last year, said the notice was just enough to “be able to put the plant in a safe state and protect our production inventory”.
“For our critical security systems, we have been using emergency generators,” said a spokesman. “We should have a better idea [of the impact] in the next 24-48 hours. ”
Citi analysts said in a note to customers early Wednesday morning that a “continued power outage from a prolonged freeze would have an impact [Infineon’s] production of memory chips and potentially exacerbate the broader restricted situation ”in automotive semiconductors.
NXP, which has two factories in Austin, said it was alerting customers to “potential disruptions to supply”.
“We are carefully monitoring the situation and will resume operations at our Austin facility as soon as possible,” said David Reed, executive vice president of operations at NXP.
Applied Materials, Qorvo, Flex and Texas Instruments are among the other companies with manufacturing across the state.