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Feb. 17, 2021, 7:26 p.m. EST

Texas storm forces chip makers to close, exacerbating shortage

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By Asa Fitch

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.  /zigman2/quotes/209800866/delayed KR:005930 +1.06% , 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 /zigman2/quotes/202999625/composite NXPI +4.33% 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.

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 /zigman2/quotes/203152288/delayed XE:IFX +3.26% , 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. 

An expanded version of this report appears on WSJ.com.

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