Nissan has announced that its massive factory in Smyrna (Tennessee) will be closed for two weeks beginning Monday because of computer chip shortages caused by the coronavirus epidemic in Malaysia.
Since the global semiconductor shortage that has hampered auto production since late last year, the shutdown at this U.S. plant is the longest.
Tuesday’s statement by Nissan stated that it was running low on chips because of a COVID-19 epidemic at a Malaysian chip factory. Production will resume on Aug. 30, according to the company.
Six thousand people work in the Tennessee factory, which covers 6 million square feet. It produces six Nissan models, including Rogue, the top-selling U.S. car.
Analysts believe that the closing of the Nissan factory for two consecutive weeks may be a sign that the shortage of semiconductors is not over by the end this year, as many executives had hoped.
There have been very few U.S. factories that went down for more than two weeks consecutively. These are usually lower-volume, less profitable vehicles such as sedans. Automakers have tried to conserve chips for plants that make their top sellers, largely SUVs and pickup trucks. Pickup truck plants have been closed sporadically, with three General Motors factories closing this week.
Sam Abuelsamid, principal analyst at Guidehouse Research, said that Smyrna was a critical factory for Nissan and its closing is a sign of the end to the shortage in semiconductors.
He said, “It looks like it’s going at least into next year.”
Abuelsamid stated that supply problems could last longer due to ongoing COVID-19 epidemics in the semiconductor supply chain in Asia.
Due to strong demand from the U.S. and a shortage of vehicles, plant closures and plant closings have led to shortages. That has driven up prices, and the shortage has spilled into the market for used vehicles.
Although the chip shortage is improving, the coronavirus beta variant of the coronavirus is causing problems at factories in semiconductor supply chains, making things worse, according to Phil Amsrud (IHS Markit senior principal analyst who studies the chip market).
In Taiwan and other parts of Asia, large chip foundries take large silicon wafers from Taiwan and make smaller integrated circuits out of them. These are then sent to Malaysian “back end” producers, where they are reshaped into chips for automotive control computers.
Amsrud stated that there are still outbreaks in these factories and the shipping industry, which is evident by the Nissan shutdown. He also said that chips automakers have now might not be suitable for future products.
Amsrud also noted that many countries doing back-end work, such as Malaysia, have low vaccination rates.
He said, “It seems to me that we’re just setting up delta for getting a foothold at all of these places.” “I believe that delta will still cause us all kinds of problems.”