Texas power outages to exacerbate global car chip shortages

The severe weather gripping the US state of Texas will worsen a global shortage of chips, after power outages forced several semiconductor manufacturing plants in the city of Austin to shut down.

South Korea’s Samsung Electronics Co, one of the world’s biggest chipmakers, as well as Dutch chip company NXP and Germany- based Infineon, two key suppliers to the automotive industry, all shut down their Austin plants.

Cui Dongshu, secretary- general of the China Passenger Car Association, told the Global Times that the developments would have a limited impact on Chinese carmakers, because China imports the majority of its auto chips from Europe.

The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co, told the Global Times on Thursday that “there’s no known major impact on operations.”

A global shortage of vehicle chips persists, however, leaving some automakers around the world with no choice but to shut down assembly lines. Industry observers warned that the Texas storms may exacerbate the global shortage and result in shortfalls until possibly mid- year.

IHS Markit on Tuesday predicted that the production of 1 million vehicles would be delayed in the first quarter due to semiconductor shortage.

Xu Haidong, vice chief engineer of the China Association of Automobile Manufacturers, said the global chip shortfall might be eased in the third or the fourth quarter, depending on whether the supply chains recover from the pandemic fallout. However, Chinese chip production capacity for the vehicle sector won’t expand much in the short term as it is heavily reliant on imports.