TOKYO – Japanese chip maker Renesas Electronics said on Sunday it could take up to a month for production to resume at a fire-damaged main factory in Hitachinaka, northeast of Tokyo.
However, given the many processes involved in semiconductor manufacturing, it can take more than three months for supply chains to return to normal.
The Renesas fire couldn’t have come at a worse time for the auto industry. Already battered by a global semiconductor shortage, the industry was in a hurry to respond to the Texas winter storm that halted production at NXP Semiconductors and Infineon Technologies, the world’s No. 1 and No. 3 automotive chip players .
Renesas is No. 2. It has a global share of approximately 20% in microcontrollers and supplies Toyota Motor and Nissan Motor.
Shares of the company are down nearly 5% in Tokyo on Monday morning.
The fire broke out at 2:47 a.m. on Friday and took more than five hours to get under control. A production line producing the latest 300mm wafers was damaged. According to the company, about two-thirds of the chips produced at the factory are destined for the automotive industry.
Renesas chief Hidetoshi Shibata speaks at an online press conference on March 21. (Photo by Takeshi Hashimoto)
CEO Hidetoshi Shibata told a press conference on Sunday that Renesas will work to resume production “within a month.” But he acknowledged a “significant” impact on the chip supply.
“My apologies for the inconvenience and problems caused by this incident,” said Shibata. “We will do everything we can to minimize the impact, including by looking at alternative production,” he said.
But “it is difficult to say whether it is possible to replace production in other factories,” said Shibata.
A separate Renesas director said the company only has about a month’s worth of inventory. An earthquake in Fukushima prefecture in February had halted production at the same plant and supplies happened to be on the low side.
A representative from a trading house told Nikkei that, combined with distributors ‘stocks, there may be two to three months’ worth of chips available. It will be a race against time.
“Car manufacturers have almost no stocks of their own,” said the trading house representative. “Once that’s gone, the impact will be felt.”
Renesas halted production at the Hitachinaka plant, northeast of Tokyo, after a fire broke out on March 19 that took more than five hours to put out. (Renesas / Kyodo)
The fire damaged 11 chip machines and affected approximately 5% of the cleanroom on the first floor of the building, or 600 square meters. A similar cleanroom on the second floor remained intact, but the company says it will not be able to resume production until the first floor has been restored.
Shibata said he fears the fire will have a major impact on the supply of chips. About 50 people from car manufacturers and customers have come to help replace the damaged machines, he said.
A car is made from about 30,000 parts. Car manufacturers are consolidating orders to fewer suppliers to cut costs, but this has increased dependence on certain partners, making them more vulnerable to such stops.
A slowdown in car production could hamper a much-needed recovery in the global economy in general as the world prepares for a recovery from COVID-19.