(Bloomberg) – The Japanese automaker’s stock fell on Monday after a fire unexpectedly disrupted one of the chip maker Renesas Electronics Corp.’s largest factories, exacerbating the growing global shortage of automotive semiconductors.
Renesas fell 5.4%, while Toyota Motor Corp. customers Honda Motor Co. and Nissan Motor Co. also fell early in the trading session. One of the largest suppliers of car chips, Renesas was forced to shut down a Japanese factory on Friday after a fire broke out in one of its clean rooms, critical areas designed to prevent impurities from contaminating semiconductors.
Toyota said on Monday that it is trying to assess the consequences of this unexpected shutdown, which could affect an industry that is already struggling to keep assembly lines operating during a severe chip shortage. The Renesas fire is likely to worsen the crisis that resulted from the growing demand for home and work devices during the pandemic, estimated earlier this year to cost global automakers about $ 61 billion in lost sales in 2021.
CEO Hidetoshi Shibata warned that the factory could be paralyzed for a month and cost the company 17 billion yen ($ 156 million) in revenue.
“I am concerned that this will have a very big impact,” Shibata said at a news conference on Sunday after the fire.
Renesas, which recorded 715.7 billion yen in revenue last year, gets about 6.6% of its sales from Toyota, according to Bloomberg’s Supply Chain Analysis. The Japanese automaker also warned that the shortage of semiconductors induced by the cold climate will force it to suspend a factory in the Czech Republic for two weeks. A Toyota representative said he was investigating the potential impact of Renesas’ shutdown, but he had nothing more to share at this point.
“This is becoming a negative story,” said Takeshi Miyao, an analyst at independent researcher Carnorama. “Production is shrinking, not increasing, so the balance between supply and demand is only getting worse.”
Read more: Headache in the supply of fire and ice aggravation chip to the automotive industry
Read more: Headache in the supply of fire and ice aggravation chip to the automotive industry
Shibata told Bloomberg News in early March that the shortage could persist until the second half, joining other industry leaders in preparing for a chip crisis to limit car and device production well after the summer.
“This is terrible for the automotive supply chain; they may have to move to keep more inventory, ”said Bloomberg Intelligence analyst Masahiro Wakasugi of the fire at Renesas.
Renesas has production facilities at six locations in Japan. The N3 building where the fire broke out is home to a 300mm wafer production, which would make it one of the company’s most advanced lines. In 2019, Renesas was the third largest automotive silicon manufacturer. Along with Toyota, Renesas has Japanese personal electronics distributor Ryosan Co. among its largest customers, according to Bloomberg’s analysis. Automakers, including Volkswagen AG, are also customers, with Honda Motor Co. and Nissan Motor Co. contributing about 2% of sales each.
“The offer will remain scarce during the first half of the year,” said Shibata in an interview published on March 12. “And the way things are now, the situation will continue in the second half. But nobody knows. “
Read more: The shortage of chips from automakers could last until the end of 2021, says Renesas
(Updates with Toyota’s comment in the sixth paragraph)
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