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Severe Winter Weather In Texas Will Impact Many Supply

 
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Angemeldet: 12.11.2020
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BeitragVerfasst am: 20.02.2021, 06:19    Titel: Severe Winter Weather In Texas Will Impact Many Supply Antworten mit Zitat
Severe Winter Weather In Texas Will Impact Many Supply Chains Beyond Chips



The harsh winter weather and ensuing electrical power crisis in Texas will exacerbate supply chain woes in many industries. It is another hit to an auto industry that was already facing a shortage of semiconductors, but the disruptions go beyond that. Because of its geographic location, a lot of intermodal freight passes through Texas as well, and this will likely impact many other sectors.

Austin, TX is the home to several important semiconductor fabs. Samsung has a large foundry that produces an estimated 90,000+ wafers per month, making a range of logic and flash memory chips using technologies as advanced as 14 nm. This makes it one of the largest capacity and one of the most advanced fabs in the U.S.. NXP Semiconductors NXPI +3.1% NXPI +3.1%, a major supplier of chips to the auto industry, has two locations on the south and east sides of town, and Infineon Technologies operates its Fab25 (a Former Cypress facility) there as well. All three companies shut down operations because of the power crisis. It sounds like they had some advanced warning, so they hopefully were able to do an orderly shutdown. This is critical to protecting work that is in progress. Fabs generally have emergency back-up generation to protect critical safety systems, but not enough to run the whole fab because of the enormous energy requirements.

Texas Instruments TXN +1% TXN +1%also has major fabs in Texas, mostly in the Dallas metropolitan area. It is a leading producer of analog chips that are widely used for sensing and bridging between the physical and digital worlds. There were no reports of it being forced to shut down any facilities.

Starting these fabs back up is more than just a matter of turning the power back on. Semiconductor chips are made with complex manufacturing processes that have hundreds of steps, and almost all of them require precise control of things like operating temperature. The manufacturing tools will have to be stabilized and the restart will take time. It will be challenging to avoid some yield loss during the process.

The weather and power outages have also had a major impact on rail traffic that is critical for many supply chains. Earlier this week the Union Pacific Railroad UNP +1% UNP +1%shut down most of its intermodal freight network from the Pacific Northwest to Texas. The company also had to reduce train lengths for safety reasons. Most of its intermodal terminals were trying to reopen yesterday or today, but it will take a while to clear up the backlog on a network that was already stressed because of record import levels from the West Coast. The Kansas City Southern KSU +2.9% KSU +2.9%, which is an important link connecting domestic supply chains with Mexico, also had to cancel many services. It also had to contend with power outages in Mexico, and was still struggling with service delays especially around Houston, Corpus Christi, and Dallas. Truck traffic at the U.S.–Mexico border also ground to a halt during the week.

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