TOKYO – Japanese chip maker Renesas Electronics said on Sunday that production could take up to a month to resume at a major factory damaged by a fire in Hitachinaka, northeast of Tokyo.
But considering the many processes in semiconductor manufacturing, it can take more than three months for supply chains to return to normal.
The Renesas fire could not come at a worse time for the auto industry. Already hit by a global semiconductor shortage, the industry was struggling to respond to the Texas winter storm that halted production of NXP Semiconductors and Infineon Technologies, the first and first three in the world in automotive chips.
Renesas is No. 2. It controls about 20% of the global share in microcontrollers and supplies products such as Toyota Motor and Nissan Motor.
The company’s stock fell nearly 5% in Tokyo on Monday morning.
The fire started at 2:47 am on Friday and took more than five hours to control. A production line that produces the last 300 mm wafers has been damaged. About two-thirds of the chips produced at the factory are for the auto 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 said at a news conference on Sunday that Renesas will make efforts to resume production “within a month”. But he acknowledged a “significant” impact on the chip supply.
“I apologize for any inconvenience and problems caused by this incident,” said Shibata. “We will make every effort to minimize the impact, including the search for production alternatives,” he said.
But “it is difficult to say whether it is possible to replace production at other factories,” said Shibata.
Another Renesas executive said the company only has about a month of inventory. A February earthquake in Fukushima Prefecture stopped production at the same plant and stocks were low.
A representative from a trading house told Nikkei that, combined with stocks held by distributors, there may be two to three months of chips available. It will be a race against the clock.
“The automakers have almost no stock of their own,” said the representative of the trading house. “Once it’s over, the impact will be felt.”
Renesas halted production at the Hitachinaka plant, northeast of Tokyo, after a fire on March 19 started and took more than five hours to extinguish. (Renesas / Kyodo)
The fire damaged 11 chip-making machines and affected about 5% of the building’s clean room on the first floor of the building, or 600 square meters. A similar clean room on the second floor has remained intact, but the company says it will only be able to resume production after the first floor is repaired.
Shibata said he feared the fire would have a major impact on the chip supply. About 50 people from automakers and customers came to help, replacing the damaged machinery, he said.
A car is made of about 30,000 parts. Automakers have been consolidating orders for fewer suppliers in order to cut costs, but this has increased dependence on certain partners, making them vulnerable to outages like these.
A slowdown in car production may make it much more difficult to recover the global economy in general, as the world prepares to recover from COVID-19.