Texas winter storm blackouts hit chip production

The Arctic storm sweeping through Texas is threatening to exacerbate a global shortage in semiconductors, after several manufacturing plants near Austin were forced to shut down.

One of the area’s largest semiconductor producers, Samsung Electronics, said it had halted operations at its multibillion-dollar fabrication plant in Austin on Tuesday, with no clear timeline for resuming production.

Austin’s local energy provider has asked all large-scale manufacturers to reduce or shutter operations during the storm. The area is home to several tech manufacturing facilities owned by suppliers including Flex, NXP, Applied Materials and Infineon.

The past week’s historic storm has claimed at least 23 lives across the southern US and left millions without power. Texas’s grid was particularly hard hit, both by the extra demand in the face of record-breaking cold and reduced supply as some power plants went offline.

As the freezing temperatures continue, Austin’s mayor Steve Adler on Tuesday told residents of the Texas capital 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 shutdown at its processor chip foundry in Austin. The South Korean electronics group had been in discussions about expanding its manufacturing in Texas with a new $17bn plant.

“Due to the recent blackouts in Texas, Samsung Austin Semiconductor gradually halted its operations around 1pm on February 16, as ordered by Austin Energy,” Samsung said. “With prior notice, appropriate measures have been taken for the facilities and wafers in production. While production will resume as soon as power supplies are restored, we are currently discussing the timing with the authorities.”

Shutting down semiconductor manufacturing even for a short time can incur multimillion-dollar losses due to the scale and complexity of the operations.

While chip manufacturing in the US is at a far smaller scale than the largest plants in Taiwan and South Korea, the timing of this week’s shutdowns could not be worse for the industry, which has already been struggling to increase supply to meet resurgent demand. The chip shortage has slowed automotive production around the world and threatens to delay other forms of electronics, including smartphones.

Infineon, which acquired a facility in Austin as part of its purchase of Cypress Semiconductor last year, is among the companies affected, analysts at Citi said in a note to clients on Wednesday morning.

“Although we expect the current impact on Infineon’s Austin fab to be limited, we anticipate that a continued power outage from a prolonged freeze would impact the company’s output of memory chips and potentially exacerbate the wider constrained situation when it comes to semiconductors aimed at the automotive end-market,” Citi said.

Germany-based Infineon did not immediately respond to a request for comment.

NXP, which is a particularly important supplier to the automotive industry, has two plants in Austin. It was not immediately able to provide details on the impact of the blackout outside US working hours.

Applied Materials, Qorvo and Texas Instruments are among the other companies with manufacturing across the state.

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