Austin fabs are in the process of recovering and restarting, but lost production will impact revenues.
Infineon Technologies and NXP Semiconductors have said their fabs in Austin, Texas have resumed production after suffering damage and forced shutdowns after the severe winter storms in February. Infineon said revenues are likely to be impacted in the short term, but it doesn’t expect full year revenue to be negatively impacted. NXP said there could be an impact of $100 million for second quarter revenue, though it didn’t give any indication of impact over the full financial year.
Infineon said it is ramping up its manufacturing facility in Austin, Texas, where its infrastructure had been recovered within one week after the forced shutdown on February 15, 2021. Tools are operational, production has been resumed and will ramp up over time to pre-outage levels. The shutdown was required after the severe winter storm and its resulting long-lasting regional power outage.
“We are pleased that the fab in Austin is up and running after the required shutdown,” said Jochen Hanebeck, COO of Infineon. “Based on our latest assessments, the impact will limit our ability to fully supply our customers’ needs. We continue to provide updates to affected customers. For most product categories from Austin, we expect to reach pre-shutdown output levels in June 2021. Due to the tight market conditions and resulting fully loaded facility, the recovery of lost production volume will not be possible. Our focus remains on delivering products of the highest quality and reliability.”
The Austin fab manufactures and tests products used in a wide variety of applications. The major impact on Infineon’s revenue related to this incident is expected in the third quarter of its 2021 fiscal year; the amount is likely to be millions Euros in the high double-digit range. Given the general business situation and the strong global demand for microelectronics, Infineon said it anticipates no negative impact on overall revenue expectation for the full fiscal year. Infineon will provide an update to the situation in Austin as part of the quarterly communication on May 4, 2021.
Meanwhile, NXP Semiconductors released a statement saying it had resumed initial operations at its manufacturing facilities in Austin following the severe winter storm and corresponding widespread disruption of gas, electricity and water experienced across Texas. The storm and subsequent loss of utilities damaged NXP’s two wafer manufacturing facilities in Austin and caused a full shutdown that began on February 15, 2021.
Utilities were restored to the impacted facilities and clean room environments were deemed safe for personnel to return on 27 February. Since that time, NXP teams have been on-site repairing damage, assessing impacted systems and executing equipment recalibrations. Personnel are currently evaluating the wafer-level work in process (WIP) to ensure appropriate product quality. Due to damage from the storm, subsequent loss of utilities and the ongoing restarting of production, approximately one month of wafer production has been lost to date from NXP’s two Austin-based wafer manufacturing facilities.
Kurt Sievers, NXP’s president and CEO, said, “The weather conditions and utility disruptions the state of Texas experienced last month were truly unprecedented. We are pleased that our Austin facilities have now resumed initial operations and we are making solid progress on our recovery plan designed to return the wafer fabs to pre-storm production levels. We understand the supply disruptions may impact our customers and we are working to ramp to full production while maintaining quality for these complex manufacturing processes. We continue to provide updates to affected customers on a regular basis and are working tirelessly to minimize potential disruption.”
NXP said at this point in time it does not believe there to be an impact to its previously communicated revenue guidance for the first quarter of 2021. Additionally, while the company has not provided any financial guidance for the second quarter, the current expectation is for an impact of approximately $100 million of revenue in the second quarter. NXP will provide additional details regarding its first quarter results and expectations for the second quarter in its earnings announcement at the end of April.
Complex recovery operations
Speaking about the complexity of restarting the fab, Steve Frezon, senior vice president of front end operations for NXP Semiconductors, said on a company blog that after the utilities came back on line in late February, “The second step was to stabilize both facilities; a multiday process of recovering both sites’ safety systems and ensuring that processes like heating and cooling are working properly. Throughout this process we conducted a variety of safety checks including evaluating our integrated air measurement system, which is a very thorough, multiday procedure to evaluate the gas elements in the air.”
He said only after they’d verified safety could the testing begin on every piece of equipment in the fabs — just under 1,000 systems per factory. “We power up all tools in a safe way, inspect all wafers in our cleanroom, our WIP, and assess any physical damage. There is a major troubleshooting component to powering up the tools because they are so sophisticated and sensitive. Restart of the tools must meet our quality standards, meaning measuring particles on each piece of equipment before certifying the tools are ready to run our sensitive production.”
Frezon said that beyond damage to manufacturing equipment, the storm damaged components of the facility infrastructure that were never meant to be replaced under any circumstances. These are components meant to last the life of the facility, and there was no simple way of removing or repairing them. “These are unprecedented challenges that most semiconductor manufacturers like NXP have never had to face. Our teams developed solutions quickly to meet these challenges. A case in point is the replacement of damaged air handler units.”