TOKYO – A fire at a factory of one of the world’s largest car chip makers has added to the problems of carmakers who have already reduced production due to a lack of semiconductors.
Friday’s fire left a lot of charred equipment in a factory owned by a subsidiary of Renesas Electronics Body.
RNECY -3.09%
in Hitachinaka, northeast of Tokyo. The company said it would take at least a month to restart the damaged operations.
Shares of the largest Japanese car manufacturers – Toyota Motor Body.
TM -2.59%
, Nissan engine Co.
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and the Honda engine Co.
HMC -2.89%
– all fell by more than 3% on Monday, worse than the global market, while Renesas shares fell by 4.9%.
The company said the heat caused by the overcurrent inside a single piece of equipment caused the fire.
Photo:
Renesas Electronics Corp.
Renesas said the heat caused by an electrical problem inside a single piece of equipment caused the fire and contaminated the clean rooms needed to make the semiconductors. It was said that two-thirds of the chips made at the factory affected by the fire were car chips.
Renesas chief executive Hidetoshi Shibata said on Sunday that the impact on global chip supply would be significant. Mariko Semetko, a credit analyst at Moody’s Japan, said the fire could slow the recovery in global car production this year, while carmakers said they were still assessing the impact.
Mr Shibata said the company was trying to make up for lost production at other plants, but did not know if this was possible. The company estimated revenue losses at the equivalent of $ 160 million a month.
Car manufacturers have already struggled with a shortage of semiconductors that partly results from an unexpectedly strong recovery after last year’s coronavirus pandemic. This left factories poorly prepared to rapidly increase production.
Ford Motor Co.
F 0.16%
said in February that it expects to cut production by up to 20% in the first quarter of this year, costing the company a profit of $ 1 billion to $ 2.5 billion before tax.
The sudden shortage of other parts and materials has also hit the global supply chain in recent weeks. The freezing and disruption in February in Texas caused the shutdown of chemical plants and affected the supply of plastics and other materials used in many products, including cars.
Renesas’ problems have already contributed to semiconductor blockages. An earthquake in February shut down the Hitachinaka factory for several days, reducing inventory. Renesas’ executive vice president, Masahiko Nozaki, said the company has an inventory to maintain transport for only a month.
The quake and fire had a feeling of déjà vu for Renesas, as the same factory was one of the hardest hit by the devastating earthquake in eastern Japan on March 11, 2011. It was offline for about three months and mobilized thousands of people, including workers’ customers to make repairs.
The factory has recently taken on a bigger role in the absence of chips. Renesas said earlier this month that it had returned to Japan to initially outsource production to Taiwan Semiconductor Manufacturing Co.
TSM 3.12%
, in an attempt to meet customer demand faster. The fire will delay some of this production, Renesas said.
Write to Yang Jie at [email protected]
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It appeared in the printed edition of March 23, 2021 under the name of “Plant fire worsens the lack of chips”.