May 19, 2022

Nissan’s six million-square-foot Smyrna, Tennessee, assembly plant will close for two weeks beginning Monday owing to computer chip shortages caused by a coronavirus outbreak in Malaysia. It announced Tuesday that it would resume production on Aug. 30.

The outage is the longest at any US car factory of this scale since the semiconductor shortage began wreaking havoc on global vehicle manufacturing late last year. The enormous Tennessee plant employs 6,700 employees and produces six Nissan models, including the Rogue small SUV, which is the company’s best-selling vehicle in the United States.

Analysts believe the two-week closure of Nissan’s huge facility is a warning that the semiconductor shortfall may not be resolved by the end of the year, as many car executives had hoped.

Few factories in the United States have been idle for two weeks in a row, and they are often those that produce lower-volume, less profitable vehicles, such as sedans. Automobile manufacturers have attempted to conserve chips for factories that produce their best-selling cars, primarily SUVs and pickup trucks. However, pickup truck plants have been shuttered on a regular basis as well, most recently three General Motors factories this week.

Sam Abuelsamid, principal analyst at Guidehouse Research, said Smyrna is a critical manufacturing site for Nissan, and its closure signals that the chip crisis may not be over.

“It’s looking like it’s going to stretch at least into the new year,” he said.

With ongoing COVID-19 outbreaks in Asia and other locations, supply chain disruptions may extend even longer, Abuelsamid added.

The scarcity and plant closures, along with increasing consumer demand in the United States, have resulted in nationwide shortages of new vehicles. This has increased prices, and the shortfall has spilled over into the used vehicle market.

While the chip deficit is improving, the coronavirus delta variant is causing problems at facilities throughout the semiconductor supply chain, escalating the situation, according to Phil Amsrud, senior principal analyst at IHS Markit, who monitors the chip business.

“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.”