Welcome to the Reuters.com BETA. Read our Editor's note on how we're helping professionals make smart decisions.
Skip to main content

Autos & TransportationTexan chipmakers face slow recovery from power crisis as demand rises

Reuters
3 minutes read
1/2

The logo of car manufacturer Tesla is seen at a branch office in Bern, Switzerland October 28, 2020. REUTERS/Arnd Wiegmann

Chipmakers, such as Samsung Electronics (005930.KS), will need a couple of weeks to resume production in Texas after shutdowns caused by severe weather, and customers could face knock-on effects in several months' time, a representative of a trade body said.

Samsung, NXP Semiconductors (NXPI.O) and Infineon Technologies (IFXGn.DE) were ordered to shut factories in Texas last month after a winter storm killed at least 21 people and left millions of Texans without power.

The shutdown threatens chip supplies to customers, when the industry is scrambling to meet demand, which is rising especially from the auto sector, but also for laptops and other products as economies recover from the impact of the pandemic.

Chipmakers now have the power, water and gas they need to operate, but they need time to restart tools and clean the factories, Edward Latson, CEO of the Austin Regional Manufacturers Association, said.

He said the process was slow and "very expensive".

The plant suspension would have an impact on automakers five months later because that is the time needed to make chips, he told Reuters.

There is also an impact now, Risto Puhakka, president of VLSIresearch, said.

"The impact is almost immediate, as the chip inventories are low and customers need them as soon as possible," he said. "We are now looking at about one month of lost production."

Samsung supplies chips for Tesla (TSLA.O) and other customers and NXP and Infineon are also automotive chip suppliers.

Tesla Chief Executive Officer Elon Musk said the electric vehicle company’s Fremont, California, plant shut down for two days last week, without elaborating further. read more

NXP, which has two factories in Austin, said in a statement on Tuesday: "We are diligently working through equipment, system and product assessments to resume our operations as soon as possible."

Samsung had no immediate comment.

Our Standards: The Thomson Reuters Trust Principles.