Tennessee Nissan plant to close for 2 weeks due to chip shortage

A huge Nissan factory in Smyrna, Tennessee, that employs 6,700 workers will close for two weeks starting Monday due to computer chip shortages brought on by a coronavirus outbreak in Malaysia, the automaker said Tuesday.

The shutdown is among the longest at any U.S. auto plant of this size since the semiconductor shortage, which has hobbled auto production worldwide, started to hit late last year.

Nissan said Tuesday that it ran short of chips due to a COVID-19 outbreak at a chip factory in Malaysia. It expects production to resume Aug. 30.

The 6 million-square-foot Tennessee factory with 6,700 workers produces six Nissan models, including the Rogue small SUV, the company's top-selling U.S. vehicle.

Analysts say the closure of such a large Nissan factory for two weeks is a sign that the semiconductor shortage may not be coming to an end late this year as many auto executives had hoped.

Few U.S. factories have been down for two weeks in a row, and they usually are plants that make 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. Although pickup truck plants have been shut down sporadically as well.

Guidehouse Research Principal Analyst Sam Abuelsamid said Smyrna is a crucial factory for Nissan and its shutdown is a sign that the end of the semiconductor shortage may 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 may last even longer than that, Abuelsamid said.

The shortage and plant closures, coupled with strong consumer demand in the U.S., have caused shortages of new vehicles across the nation. That has driven up prices, and the shortage has spilled into the market for used vehicles.