Nissan chip shortage hits Tennessee plant

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Detroit – Nissan has announced that its huge Smyrna, Tennessee plant will shut down for two weeks from Monday due to a computer chip shortage caused by a coronavirus outbreak in Malaysia.

The shutdown is one of the longest for a U.S. auto plant of this size since the semiconductor shortage, which has hampered auto production around the world, began to hit late last year.

Nissan said on Tuesday it was running out of chips due to a COVID-19 outbreak at a chip factory in Malaysia. He expects production to resume on August 30.

The 6 million square foot Tennessee plant employs 6,700 people and manufactures six Nissan models, including the small SUV Rogue, the company’s best-selling American vehicle.

Analysts say the two-week shutdown of the large Nissan plant is a sign that the semiconductor shortage may not end by the end of this year, as many auto executives had hoped.

Few US factories have been closed for two consecutive weeks, and these are typically factories that make low-volume, less profitable vehicles, such as sedans. The automakers have tried to keep the chips for the factories that make their best sellers, primarily SUVs and pickup trucks. But pickup truck factories have also been closed sporadically, including three General Motors factories this week.

Guidehouse Research senior analyst Sam Abuelsamid said Smyrna is a crucial plant for Nissan and that its closure is a sign that the end of the semiconductor shortage may not be in sight.

“Looks like it’s going to extend at least until the new year,” he said.

With COVID-19 outbreaks continuing in the semiconductor supply chain in Asia and other regions, the supply problems could last even longer, Abuelsamid said.

The shortage and plant closures, coupled with strong consumer demand in the United States, have caused shortages of new vehicles across the country. This drove up prices and the shortage spilled over into the used vehicle market.

The chip shortage is starting to improve, but the delta variant of the coronavirus is starting to cause problems at factories in the semiconductor supply chain, making matters worse, said Phil Amsrud, senior senior analyst for IHS Markit who studies the flea market.

Big chip foundries in Taiwan and elsewhere in Asia take large wafers of silicon and turn them into several smaller integrated circuits. They are then shipped to ‘back end’ manufacturers in Malaysia where they are cut into chips which are used in automotive control computers.

But epidemics among workers at those factories and in the shipping industry are again affecting supplies, as evidenced by Nissan’s shutdown, Amsrud said. Also, the chips that automakers are getting now may not be the right ones for the products they want to build in the future, he said.

In addition, many countries that do the background work like Malaysia have low vaccination rates, Amsrud noted.

“It seems to me that we are just ready for delta to gain a foothold in all of these places,” he said. “I think delta is going to give us all kinds of trouble again.”


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