The fire scorched equipment in an area of a factory owned by a subsidiary of Renesas Electronics.
A fire at a plant of a major global automotive chipmaker has added to the woes of automakers who have already cut production due to chip shortages.
Last Friday’s fire scorched equipment in an area of the plant. The plant is located in Hitachinaka, northeast of Tokyo, and is part of a subsidiary of Renesas Electronics Co. Renesas Electronics said it would take at least a month before it could restart the damaged business.
Shares of all three major Japanese automakers fell more than 3 percent on Monday, a bigger drop than the overall market, while Renesas Electronics’ shares sank 4.9 percent. The three automakers include Toyota Motor Corp. (Toyota Motor Corp., 7203.TO), Nissan Motor (Nissan Motor Co., 7201.TO) and Honda Motor (Honda Motor Co., 7267.TO).
Renesas Electronics said some electrical problems with a piece of equipment caused an overheating fire, and the fire also contaminated some clean rooms where semiconductors are produced. Two-thirds of the chips produced at the plant are automotive chips, the company said.
Renesas Electronics Chief Executive Officer Hidetoshi Shibata said Sunday that this will have a significant impact on global chip supply. Mariko Semetko, credit analyst at Moody’s Japan, said the fire could dampen the recovery in global auto production this year, while automakers said they are still assessing the resulting impact.
Renesas Electronics is trying to find other production sites to make up for the lost capacity, but it’s not sure if that’s feasible, according to Shibata Eiri. The company estimates that the resulting loss could be as much as $160 million a month.
Renesas Electronics says some electrical problems at one facility caused an overheating fire. Photo credit: RENESAS ELECTRONICS CORP.
Automakers are already struggling with semiconductor shortages. An unexpectedly strong rebound in demand after last year’s outbreak of the new crown caused a shortage of semiconductor supply to some extent. This makes it difficult for factories to increase production quickly.
Ford Motor Co. (Ford Motor Co., F) said in February that it expects to cut production by as much as 20 percent in the first quarter of this year, and could lose $1 billion to $2.5 billion in pre-tax profits.
In recent weeks, sudden shortages of other parts and materials have also hit the global supply chain. extreme cold spells and massive power outages in Texas in February led to the shutdown of chemical plants and hit the supply of plastics and other materials used in many products, including automobiles.
Previous encounters at Renesas Electronics have added fuel to the semiconductor supply chain bottleneck, with an earthquake in February causing production at the Hitachinaka plant to shut down for several days and reducing inventory. Renesas Electronics Executive Vice President Masahiko Nozaki (Masahiko Nozaki) said that the company’s current inventory can only maintain a month of shipments.
The earthquake and fire for Renesas Electronics is like a repeat of a nightmare, because the Hitachinaka factory site is one of the hardest hit by the March 11, 2011 earthquake in eastern Japan. At that Time, the plant shut down for about three months and mobilized thousands of people, including employees under customers, to carry out repairs.
More recently, the plant has tried to play a bigger role in easing the chip shortage. Renesas Electronics said earlier this month, in order to more quickly meet customer demand, the company has been outsourced to Taiwan Semiconductor Manufacturing Co. Renesas Electronics said the fire will also affect this part of the production capacity.
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