Texas winter storm halts semiconductor production

Plant closures will further compound automotive supply chain problems

Semiconductor manufacturers have shuttered their Texas production plants this week as a winter storm continues to ravage the state, causing power shortages and rolling blackouts. The shutdowns will worsen an already critical shortage in the semiconductor supply chain.

According to reports, Samsung, which operates two factories in Austin, Texas, has temporarily shut down production there at local authorities’ request. The company began its Austin operation in 1996 with the construction of a $1.3 billion plant. In 2007, Samsung opened a 1.6-million-square-foot, $3.5 billion NAND flash chip facility in Austin.

Dutch chip manufacturer NXP Semiconductors also had to halt production at its two Austin facilities. 

"Austin-area utility providers are prioritizing service to residential areas and for critical health, safety and human services. As a result, electricity and natural gas providers have temporarily suspended service to Austin semiconductor manufacturers, including NXP," NXP Semiconductors said in a statement, adding it was notifying affected customers directly of potential supply disruptions.

NXP, a large automotive parts supplier, expanded into Texas via an $11.8 billion merger with Freescale Semiconductor in 2015. 

Infineon, another automotive chip maker, also shut down its Austin plant Tuesday,

Texas has been struggling with an arctic winter storm that’s affected 25 states in the US. Austin declared a state of disaster on February 12, following what it said were the lowest temperatures in decades.

The power emergency began with several power plants going offline in rapid succession. The Electric Reliability Council of Texas, which manages the state’s electricity grid, said it lost about 34,000 megawatts of supply on Monday and declared a level-three emergency. It ordered electrical utilities statewide to cut power demand by about 16,500 megawatts via controlled power outages.

Austin issued an order on Monday for manufacturers to shut down non-essential operations "to the greatest extent possible." The order remains until February 22.

As the power went out, energy demands increased from people trying to stave off the cold. An ice storm in the Austin area on Wednesday added to the problem.

The outages will add to a shortage in semiconductors affecting the US supply chain. The automotive sector is among the hardest-hit sectors, leding several companies to shut down their plants this month. 

Last year, semiconductor revenues fell 0.9% as Congress introduced legislation to bolster the domestic semiconductor industry.

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