FILE PHOTO: U.S. chipmaker Intel Corp’s logo is seen on their “smart building” in Petah Tikva, near Tel Aviv, Israel December 15, 2019. REUTERS/Amir Cohen/File Photo
(Reuters) – A group representing major U.S. semiconductor companies on Wednesday said it was working with federal officials to make clear to state and local officials overseeing lockdowns that chip companies are essential businesses that should continue operations.
In a blog post, the Semiconductor Industry Association, which represents chipmakers with major U.S. factories such as Intel Corp and Micron Technology Inc, said it was working with the U.S. Department of Homeland Security to refine the guidance sent to state and local officials last week.
That guidance mentioned chipmakers as an essential business because of their role supporting information technology, which has become crucial as millions of Americans work from home. John Neuffer, the group’s president, said in a blog post that chips also play a vital role in medical equipment, power grids and other needed infrastructure.
“Ensuring the continuity of semiconductor and related supply chains is necessary to support the even greater range of services that will be digitized in the coming weeks and months,” he wrote. “Since the semiconductor supply chain is highly globalized, semiconductor shortages created by operating restrictions in one region cannot be readily made up by production in other regions.”
To date, major chip companies in the United States have not reported manufacturing disruptions. Last week, Intel Chief Executive Bob Swan said in a letter to customers that its factories, including locations in California, Oregon, New Mexico and Arizona, were “sustaining a rate of on-time delivery currently greater than 90%.”
Sanjay Mehrotra, chief executive of memory chip maker Micron, which has factories in Utah, Idaho and Virginia, also said in a letter last week that the company had “carefully managed raw materials and our supply chain to maintain our manufacturing capabilities and production.”
But on Wednesday during an earnings conference call, Mehrotra disclosed that an order limiting movement of citizens in Malaysia on March 16 had hit factories in Muar and Penang, which “were briefly shut down” before officials there declared chip factories an essential business. He said the factories “have since been able to return to production on a very limited basis, in compliance with local regulations.”
Reporting by Stephen Nellis in San Francisco; Editing by David Gregorio and Alistair Bell