TOKYO – Japanese chip maker Renesas Electronics said on Sunday that production could take up to a month to resume at a major factory affected by the fire in Hitachinaka, northeast of Tokyo.
But given the many semiconductor manufacturing processes, it can take more than three months for supply chains to return to normal.
Renesas’ fire could not have come at a worse time for the car industry. Already plagued by a global shortage of semiconductors, the industry was struggling to respond to the Texas winter storm that wiped out production at NXP Semiconductors and Infineon Technologies, the world’s No. 1 and No. 3 players in car chips.
Renesas is number 2. It controls an overall 20% share in microcontrollers and supplies products such as Toyota Motor and Nissan Motor.
The company’s shares fell by almost 5% in Tokyo on Monday morning.
The fire broke out Friday at 2:47 a.m. and took more than five hours to control. A production line producing the latest 300 mm wafers has been damaged. About two-thirds of the chips produced at the plant are destined for the automotive industry, according to the company.
Renesas chief Hidetoshi Shibata speaks at an online press conference on March 21 (photo by Takeshi Hashimoto)
CEO Hidetoshi Shibata told a news conference on Sunday that Renesas would work to resume production “within a month”. However, he acknowledged a “significant” impact on the chip supply.
“I apologize for any inconvenience and problems caused by this incident,” Shibata said. “We will make every effort to minimize the impact, including analyzing alternative production,” he said.
But “it is difficult to say whether it is possible to replace production at other factories,” Shibata said.
A separate Renesas executive said the company has only one month of inventory. An earthquake in February in Fukushima prefecture stopped production at the same factory, and stocks just happened to be running out.
A representative of a trading house told Nikkei that, combined with the stocks held by distributors, there may be two to three months of chips available. It will be a race against the clock.
“Car manufacturers have almost no inventory of their own,” said the representative of the trading house. “Once it’s gone, the impact will be felt.”
Renesas shut down production at the Hitachinaka plant, northeast of Tokyo, after a March 19 fire that lasted more than five hours until extinguished. (Renesas / Kyodo)
The fire affected 11 chip machines and affected about 5% of the clean room on the first floor of the building, ie 600 square meters. A similar clean room on the second floor has remained intact, but the company says it can resume production only after the first floor is repaired.
Shibata said he fears the fire will have a major impact on the chip supply. About 50 people from automakers and customers came to help, replacing the damaged cars, he said.
A car is made of about 30,000 parts. Car manufacturers have strengthened orders to fewer suppliers to reduce costs, but this has increased dependence on certain partners, making them vulnerable to stops like these.
A slowdown in car production may prevent a much-needed recovery of the global economy in general as the world prepares to return from COVID-19.