Nissan Motor Co on Tuesday said that its factory in Smyrna, Tennessee, would close for two weeks starting on Monday due to chip shortages brought on by a COVID-19 outbreak in Malaysia.
The shutdown is among the longest at any US auto plant of this size since the semiconductor shortage, which has hobbled vehicle production worldwide, started late last year.
Nissan said that it ran short of chips due to a virus outbreak at a chip factory in Malaysia.
Photo: Bloomberg
It expects production to resume on Aug. 30.
The 560,000m2 Tennessee factory employs 6,700 people and makes six Nissan models, including the Rogue small sports utility vehicle (SUV), the company’s top-selling US vehicle.
Analysts said that the temporary closure is a sign that the semiconductor shortage might not be coming to an end late this year as many industry executives had hoped.
Automakers have tried to conserve chips for plants that make their US top sellers, largely SUVs and pickup trucks.
However, pickup truck plants have been shut down sporadically as well, including three General Motors Co factories this week.
Sam Abuelsamid, an analyst at Guidehouse Research Principal, said that the Smyrna plant is crucial for Nissan, adding that the shutdown is a sign that the end of the semiconductor shortage might not be in sight.
“It’s looking like it’s going to stretch at least into the new year,” he said.
With continuing COVID-19 outbreaks across the semiconductor supply chain in Asia and other regions, supply problems might last even longer than that, Abuelsamid said.
The chip shortage is starting to improve, but the Delta variant of SARS-CoV-2 is starting to cause problems at factories in the semiconductor supply chain, making matters worse, IHS Markit senior principal analyst Phil Amsrud said.
Large chip foundries in Taiwan and elsewhere in Asia take large silicon wafers and turn them into multiple smaller integrated circuits. They are then shipped to “back- end” manufacturers in Malaysia, where they are cut into chips that are used in automotive control computers.
However, outbreaks among workers in those factories, and in the shipping business, are affecting supplies again, as evidenced by the Nissan shutdown, Amsrud said.
Also, chips that automakers are getting now might not be the right ones for products they want to build in the future, he said.
In addition, many countries that do the back-end work like Malaysia have low COVID-19 vaccination rates, Amsrud said.
“It looks to me like we’re just set up for Delta getting a foothold in all of these locations,” he said. “I think Delta is going to still cause us all sorts of problems.”
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