Renesas: Plant fire worsened chip shortage worldwide as automakers forced to halt productions

Renesas Electronics is one of the biggest makers and suppliers of semiconductor products, especially at this time of chip shortage around the world. However, when a fire destroyed the company’s factory, the situation of the chip shortage has turned for the worst.

Companies that require chips for their productions are barely recovering, and now this fire incident happened. This left them reeling, and it seems that they are back to square one as they try to find other semiconductor sources for their products.

The fire at Renesas

The fire on March 19 engulfed the Renesas factory in Hitachinaka, Tokyo. Based on the report, this affected about two-thirds of production on the advanced 300mm wafer line.

The equipment in the plant was destroyed, and most likely raw materials were charred as well. With the severity of the fire, the CEO of Renesas, Hidetoshi Shibata, said via online meeting that it would take up to a month before they could restart the production again, as per The Wall Street Journal.

As for the cause of the blaze, the company revealed it was an electrical problem. It was suggested that overheating in one of the equipment caused the fire that quickly spread to the areas where semiconductor processings are done.

Carmakers prepare for further effects of the chip shortage

Shibata acknowledged the fact that the fire in the company’s factory will gravely impact the global chip supplies. A credit analyst at Moody’s Japan, Mariko Semetko, added that the sudden halt of the chip supply would most likely dampen the recovery efforts of car production this year.

This surely means more trouble for automakers that are already struggling to cope with the chip demand for their cars. In fact, The Seattle Times reported that Toyota, Nissan, and Honda have already temporarily closed down their factories since they can’t continue the work without the needed chips.

"It will probably take more than a month to return to normal supply. Given that, even Toyota will face very unstable production in April and May," Japan Today quoted a senior analyst at Tokai Tokyo Research Institute, Seiji Sugiura, as saying. "I think Honda, Nissan, and other makers will also be facing a difficult situation."

Finally, stocks of the three Japanese car manufacturers have also dropped between 2 and 3 percent after the suspension of their productions. Renesas stocks were also down by 4.9 percent.