How Minnesota's biggest computer-chip plant is adapting to coronavirus pressure

Since its start in the 1980s, the computer chip factory in Bloomington that is now owned by SkyWater Technology has been operating around the clock except for a single planned shutdown that lasted two months.

Now, workers and managers are striving to be sure coronavirus doesn't impose an unplanned one.

Around the world, semiconductor makers have faced the ultimate test during the virus outbreak. Chips are the center of not just computers and smartphones but most manufactured devices. And because chip factories are so expensive, they run continuously to maximize their value.

In Minnesota, that test is borne most heavily by SkyWater, which not only operates the state's largest chip-fabrication plant but is also expanding it. As well, SkyWater in recent months has produced a key component in a Chinese firm's DNA sequencing system that detects COVID-19.

"We wouldn't want to shut down in any circumstance and we are in the category as an essential operation just because of some of the products we're making," said Tom Sonderman, the company's chief executive.

So far, the global chip industry has seen no major disruptions to production, but there have been worries about inventory, some wild swings in pricing and a falloff in demand that is still emerging.

"It's been pretty insane," said longtime market analyst Dan Hutcheson of VLSI Research. "Not even SARS was this bad. The closest it comes to is when you look at the [2011] earthquake in Japan."

China, where the virus emerged, and nearby South Korea are both major centers of chip production. Prices spiked for memory chips when the virus accelerated through South Korea a month ago but settled as that country's factories remained at high output and supply fears abated.

Investors and economists are watching chipmakers' resilience because so many other parts of the economy depend on them and the chipmakers require enormous capital. The most advanced plants owned and run by firms like Intel, TSMC and Samsung cost about $10 billion to build.

SkyWater is spending several hundred million dollars on its current expansion, helped by a grant from the Department of Defense, one of its customers. If SkyWater had to shut down, it would take two weeks to bring production to a stop and six weeks get it restarted, Sonderman said.

"From an economic perspective, that's just unmanageable downtime in a business that has very high fixed costs," he said.

SkyWater began reacting to the virus when it first broke out in China because it has both suppliers and customers there. But when it spread to Minnesota earlier this month, the company, like other local employers, took new steps to protect employees, such as spacing people out in meetings, the cafeteria and common areas. It also allowed workers who could to telecommute.

About one-third of the firm's 500 employees work in an office setting, including engineers and scientists. The rest work in the plant itself, two ultraclean rooms the size of football fields where workers are completely gowned and masked to reduce microscopic particles that can ruin the subatomic-sized circuitry on chips.

The extreme air filtering in a cleanroom also reduces pathogens inside it. "The air in a cleanroom is cleaner than in an operating room in a hospital," Hutcheson said.

When Gov. Tim Walz last week ordered the closing of Minnesota schools, SkyWater gave parents of schoolchildren more flexibility to schedule their work. It also began to stagger shift starts so fewer workers are together at once in locker rooms and other common areas. And it created a quick-response team to help any worker who says they feel sick.

Workers have responded with their own ideas and production has increased modestly. One worker created a new way to store hoods and gowns that quickly spread through the ranks, said Jim Stockburger, a senior production supervisor.

"They understand this is a key place, it's a safe place to work and we need everybody here," he said.

Meanwhile, construction crews continue to work on the exterior of what will be SkyWater's third cleanroom.

Evan Ramstad • 612-673-4241