Extreme weather hits computer chip supply chains

18 February 2021

Power cuts caused by unusually severe weather in Texas, US, have caused a ripple effect in supply chains as companies are forced to suspend production.

Below-freezing temperatures have crippled power facilities in Texas and caused millions of consumers and businesses in around a quarter of the state to go without power for several days.

NXP, one of the world’s largest makers of chips for the automotive industry, said on Wednesday it had suspended operations at two plants in Austin as utility providers prioritised service to residential areas critical health, safety and human services.

“Electricity and natural gas providers have temporarily suspended service to Austin semiconductor manufacturers, including NXP, requiring the company to idle manufacturing at its two Austin facilities,” said the company.

“Once necessary utility services are restored, our operations team will be able to evaluate the impact of the shut down, and when full production will resume. In the meantime, our focus is on the health and safety of our employees and the Austin community.”

The company said it had informed customers of potential supply chain disruptions.

Samsung Electronics Co, the world’s second largest semiconductor maker, has also suspended production at its Austin site while another major automotive chip supplier, Infineon Technologies AG, also saw power turned off at its Austin site.

Chip manufacturers have been especially badly hit by outages as many are concentrated in one of the most badly-affected areas. At the same time chip production lines typically run 24 hours a day because shutting them down tends to damage stock already in production.

“Due to the recent blackouts in Texas, Samsung Austin Semiconductor gradually halted its operations around 1pm on 16 February, as ordered by Austin Energy,” Samsung was reported as saying.

“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.”

Carmakers are already struggling with a global shortage of chips, with firms slowing or suspending production and bracing themselves for price rises.

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