Chipmakers Halt Production in Texas Amid Power Failure

Article By : Alan Patterson

Samsung, NXP and Infineon have stopped operations at chip fabs in Texas after a surprise cold wave caused power outages in the US state that is a major energy supplier...

Samsung, NXP and Infineon have stopped operations at chip fabs in Texas after a surprise cold wave caused power outages in the US state that is a major energy supplier.

The chipmakers halted production in the city of Austin around Feb. 16 after notification of power cuts by Austin Energy. There’s no word from the companies on when production will resume or how big the impact will be on output.

Austin power providers are prioritizing service to residential areas and for critical health, safety and human services, NXP said in a press statement. As a result, power has been suspended to Austin chipmakers, including NXP at its two Austin facilities, the company added. “With prior notice, appropriate measures have safely been taken for the facilities and wafers in production,” the Austin American-Statesman newspaper cited Samsung spokeswoman Michele Glaze as saying.

The impact on output of silicon wafers and precision production equipment may have been minimized by an orderly shutdown, Semiconductor Advisors President Robert Maire told EE Times in an email.

“If they had a couple of hours’ warning, they likely could have gotten most of the wafers out of the tools and done a ‘soft’ shutdown in which the tools power down in an organized fashion.  This would lead to minimal loss of wafers and minimal tool downtime.”

Even in this best case, it could take a week or two for the fabs to come back online, according to Maire. The problem may be worse if the power is off for a longer period as the fabs and production tools would get cold. In addition, the air inside fabs must be highly controlled for humidity and filtered for dust, which doesn’t happen with the power off, he said.

Addendum — Infineon responded after this article was first published:

“We have been informed by local authorities that power for our plant in Austin would be turned off,” Infineon said in an emailed response to EE Times. “This gave us a few hours to prepare for the disruption, and we were able to put the factory into a safe state and to protect our employees and production inventory. For our critical safety systems, we have been using emergency generators.”

In a capital-intensive chip facility costing billions of dollars, companies need to maintain round-the-clock operations to maximize profit. It’s not a simple task with so much precision equipment that’s sensitive to environmental conditions.

“At a leading-edge fab, tools run 24/7, so getting them up to temperature and calibrated takes a lot of time, most especially with lithography tools,” Maire said. If the lenses in an EUV (extreme ultraviolet) or DUV (deep ultraviolet) tool go out of controlled temperature for any length of time, it will take a very long time to get them back to temperature and stabilized and calibrated.”

Total combined capacity in Austin from the three chipmakers is about 115,000 wafers per month in 300mm wafer equivalent terms, VLSIresearch analyst Andrea Lati told EE Times. Total capacity in the US should be around 1.2 million wafers per month, so Austin should account for between 9% to 10% of the total US capacity, she said.

Worsening chip shortages  

The halt in output from Austin will worsen global chip shortages that are already slowing production of everything from cars to smartphones. In 2020, the coronavirus pandemic impacted demand for automobiles, and carmakers cut chip orders in the third quarter. Orders rebounded starting in the fourth quarter last year, and shortages emerged in mature nodes such as 40nm and 55nm.

“The bottom line is that it’s a huge mess,” Maire said.  Samsung will probably bear a significant impact because Austin is where the company’s only US production is located. The company may need to reconsider a plan to build a new $10 billion fab in Texas, IC Insights vice president Brian Matas told EE Times.

“What has happened to the Texas power system during this cold snap will be a major issue with Samsung as it considers Austin as a potential location to invest $10 billion for a new fab.  It, and other potential fab operators, must be debating and asking hard questions to state leaders about ERCOT, the organization of power companies in the Lone Star State that manages/controls the power grid.  Not having a backup source and not being able to buy reliable power from neighboring states when the local grid fails is a clear deal breaker.”

ERCOT, the Electric Reliability Council of Texas, manages the flow of electricity on the Texas power grid to more than 25 million customers, representing 90% of the state’s electric load.

On Feb. 16, shortages caused the price of electricity in Texas to exceed $9,000 for 1 megawatt-hour (MWh) of power, while the week before, the lowest price was less than $30.

Texas Governor Greg Abbott declared the reform of the ERCOT a top priority for the state legislature this session, and he wants to investigate ERCOT to determine what caused the problems and find long-term solutions.

Car chips

Infineon and NXP are key suppliers of automotive silicon, and they were struggling with chip shortages before the power outage, according to Matas.

“The closure of fabs in Austin will almost certainly put additional upward pressures on automotive IC ASPs, which already have increased, and are expected to further increase this year. Carmakers and automotive system OEMs aren’t going to like it, but they will likely face even greater price pressure and longer lead times for automotive ICs — at least near term.  Unfortunately, there isn’t much they can do to change the situation.”

In the past, even brief fab disruptions have resulted in long-term shortages and price hikes, which certainly is not good news in the midst of the ongoing global chip shortages, according to Matas.

In the meantime, Austin has a lot to worry about, including people who are suffering freezing temperatures inside their homes.

The Austin city government has declared a state of disaster that it expects to last no longer than Feb. 21. Austin has become a US hub for semiconductor manufacturers and an ecosystem of materials and production tool suppliers.

Samsung completed its 300mm “S2” fab in Austin in 2011 for about $9 billion to produce low-power logic at the 45nm node. NXP’s two 200mm Austin facilities, acquired from Freescale Semiconductor, were built by Motorola during the 1990s. Infineon’s 200mm “Fab25” in Austin was acquired from Cypress Semiconductor.

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