Write a summary with a insightful and critical thinking referenced from the news article attached to this post.

Reference:   

Fitch, A. (2021, February 17). Texas winter STORM STRIKES chip MAKERS, compounding SUPPLY WOES. Retrieved February 18, 2021, from https://www.wsj.com/articles/texas-winter-storm-strikes-chip-makers-compounding-supply-woes-11613588617

Texas Winter Storm Strikes Chip Makers, Compounding Supply Woes

Severe weather conditions hitting much of the U.S. have caused some semiconductor companies to idle production capacity, threatening to exacerbate a chip shortage that

has already prompted car makers to curtail output

at some plants.

South Korea’s

Samsung Electronics

Co. , one of the world’s biggest chip makers, operates two factories in Austin, Texas, and was asked by local authorities to shut those down on Tuesday, said a company spokeswoman. Samsung expects to resume production as soon as possible and, the spokeswoman said, was waiting for electricity provider Austin Energy to advise when the chip maker’s operations could start up again.

Texas has suffered widespread power disruptions

that began early Monday amid a severe winter storm. The outages have prompted local officials to ask companies to reduce operations to minimize demand on the region’s power grid.

The Austin facilities represent about 28% of Samsung’s overall production capacity, according to Citi analysts. Austin is a manufacturing hub for Samsung, which is considering

a $17 billion plan to expand its operations

there or in other parts of the U.S.

Dutch chip company

NXP Semiconductors

NV said Wednesday that it had to scale back work at two facilities in Austin. “Affected customers are being notified directly by NXP of the potential for supply disruptions,” the company said.

NXP makes chips for the automotive industry. Automotive sales comprised $1.19 billion of the company’s fourth-quarter revenue, roughly half of the overall figure.

“Once necessary utility services are restored, our operations team will be able to evaluate the impact of the shutdown, and when full production will resume,” said NXP’s vice president of operations, David Reed.

NXP’s Austin facilities represented about 30% of the company’s total factory square footage as of 2019, according to a regulatory filing.

Other large customers of Austin Energy have also shut down because of the storm, according to a statement from a consortium of those customers. Germany-based

Infineon Technologies

AG , a car-chip supplier, has manufacturing facilities there that Citi analysts say mainly produce memory chips critical for automotive and industrial markets that accounted for about 5% of the company’s revenue last year.

Infineon said it shut down its Austin plant on Tuesday after authorities said power supply would be interrupted. It set up a task force to monitor the situation and ensure the safety of about 1,000 employees there, said an Infineon spokesman, who added that the company was evaluating the impact and would follow local guidance on reopening.

The disruptions

come at a particularly critical time for the chip industry, which has experienced surging demand with little spare production capacity as individuals and businesses adapt to working from home during

the coronavirus pandemic

. Sales of laptops, videogames and data-center servers are up.

The car industry has been hit hard by the supply issues after some parts makers failed to secure sufficient chips to feed fast-growing demand.

Volkswagen

AG ,

General Motors

Co. ,

Ford Motor

Co. and others responded

by trimming vehicle production

.

Even before the winter weather struck, leading to the Texas power outages, the chips shortage had dented growth ambitions. The shortage was projected to cause the global auto industry to produce nearly 700,000 fewer cars than planned for the first three months of 2021, according to research group

IHS Markit

Ltd.

Analysts at Raymond James said in a note that the Samsung shutdown would likely worsen already tight chip-supply conditions. The Austin facilities comprise largely older chip-manufacturing technologies and thus aren’t likely to have a significant impact on customers such as mobile-phone-chip designer

Qualcomm

Inc. or graphics-chip maker Nvidia Corp., Raymond James said.

Reference:

Fitch, A. (2021, February 17). Texas winter STORM STRIKES chip MAKERS, compounding SUPPLY WOES. Retrieved February 18, 2021, from https://www.wsj.com/articles/texas-winter-storm-strikes-chip-makers-compounding-supply-woes-11613588617