US Semiconductor Factories Shut Down One After Another... Domestic Companies Also Unavoidably Affected

Cold wave causes shutdowns at semiconductor plants including Samsung Electronics and NXP in Texas, USA
Chain impact expected on automakers due to shortage of automotive semiconductors

Heating with a car heater in a Texas home during a cold wave blackout [Image source=Yonhap News]

[Asia Economy Reporter Changhwan Lee] As the United States continues to experience record-breaking cold waves, the global shortage of automotive semiconductors is expected to worsen. Semiconductor factories manufacturing automotive chips, including Samsung Electronics, NXP, and Infineon located in Texas, have all shut down due to the cold wave. Domestic automakers such as Hyundai Motor, Kia, and Korea GM, which are already struggling with semiconductor supply, are also expected to be affected.

According to the semiconductor industry on the 18th, semiconductor factories including Samsung Electronics, NXP, and Infineon located in Austin, Texas, have suspended operations for two consecutive days, including the previous day. A large-scale power outage occurred locally due to the severe cold, and the Austin power authorities requested semiconductor companies, which consume a lot of electricity, to halt factory operations. Recovery efforts from the cold wave are still ongoing, making the timing of factory resumption uncertain.

These semiconductor factories mainly produce system semiconductors, with a significant portion being automotive semiconductors. Currently, automotive semiconductors are in short supply compared to demand, causing a global shortage, and the suspension of factory operations is expected to further exacerbate supply difficulties.

The shortage of automotive semiconductors began in the first half of last year when global automakers reduced semiconductor orders due to concerns over decreased demand amid the spread of COVID-19. As orders for automotive semiconductors declined, semiconductor companies responded by switching production lines to semiconductors for IT devices, which are relatively more profitable.

However, vehicle demand recovered faster than expected, and the production line changes led to a shortage of automotive semiconductors. Global automakers such as GM, Toyota, Ford, and Audi have already been reducing production since the beginning of the year due to semiconductor shortages, and this cold wave incident is likely to extend the production cut period.

Korean automakers are also inevitably affected. Korea GM has reduced production at its Bupyeong Plant 2 by about half. Hyundai Motor and Kia have semiconductor inventory secured last year, so there should be no major issues with factory operations until next month, but the situation after April is problematic.

During the earnings conference call on the 27th of last month, Kia also stated that there would be no short-term disruption in vehicle production, but semiconductor inventory is not even prepared for three months. Industry insiders believe that if this situation continues, Hyundai Motor and Kia may have to start production cuts from April onward.

Recently, the difficulties of parts suppliers who must directly procure semiconductors and supply them to automakers Hyundai Motor and Kia have increased. A representative from a first-tier supplier to Hyundai Motor and Kia said, "We are agonizing day by day trying to secure semiconductors," adding, "Automakers want parts delivered as usual, but semiconductor companies say normal supply is difficult, so it wouldn't be surprising if operations stop at any time."

A representative from a second-tier supplier also lamented, "Semiconductors are not coming in, but the higher-ups insist on unconditional delivery, so there is no solution," and added, "It feels like we are carrying a time bomb that could explode at any moment."

As the semiconductor supply shortage prolongs, a reduction in overall automobile production is inevitable. Global market research firm IHS Markit forecasted that due to the shortage of automotive semiconductors, about one million vehicles worldwide will face production disruptions in the first quarter of this year alone.

This content was produced with the assistance of AI translation services.