Texas chipmaker production delays due to Winter Storm Uri impacting auto industry
The effects of Winter Storm Uri are still being felt across Texas and it's impacting the auto industry. Reporting by Reuters tells that chipmakers, like Samsung Electronics, are still weeks away from resuming normal operations in Texas.
Traditionally, this sort of production slowdown wouldn't much impact the industry. There would typically be enough dealership and inventory and automaker back stock to make up for many, if not all of the shortages for a short period of time. However, COVID-19 has put a strain on the chipmaking industry and is already slowing production, limiting sales, and hurting automaker bottom lines.
There's also been increased demand for semiconductor chips as sales of laptops, gaming consoles, and other entertainment and exercise equipment soared as coronavirus-related lockdowns changed lifestyles globally.
Ford and General Motors have both said that their 2021 sales and profits will be hit hard by the shortage. Additional analysis by Reuters says that Toyota has enough inventory to last four months while Hyundai and Kia, which share common ownership, purchased a stockpile of chips when production was going full steam in late December and are thus far unaffected.
Samsung and NXP Semiconductors shut their factories in Texas last month when Winter Storm Uri took hold. Like Lone Star State households, Texas businesses lost access to electricity, natural gas, and water.
Samsung's logic chip plant is located in Austin. It began operating 2017 and makes chips using Samsung's 14-nanometer, 28-nm and 32-nm chip production technologies. The facility is Samsung's biggest logic chip production facility outside of South Korea, where the company is headquartered. The company also has a NAND flash chip facility in Austin.
NXP's plants are also in Austin where the company has its corporate headquarters. While there are nine other NXP offices in the U.S., there are no other manufacturing sites.
Edward Latson, CEO of the Austin Regional Manufacturers Association, told Reuters that chipmakers now have the power, water and gas they need to operate, but they need time to restart tools and clean the factories. He characterized the process as being slow and "very expensive".
The one month of lost production is most likely to hit automakers hardest five months down the road, in the third quarter.
Many analysts had been predicting an uptick in new vehicle sales for 2021 after car sales rallied in the fourth quarter of 2020. However, these chip shortages are deeply impacting those sales predictions.