Renesas Electronics "adding fuel to the Fire" Global shortage of Automotive chips "aggravates the disaster"

The global shortage of automotive chips has been exacerbated by supply problems among the world's top three automotive chip manufacturers.

On Friday, a fire broke out in the N3 building (12-inch wafer production line) of Japanese automotive semiconductor maker Renesas Electronics in Nake, Japan, scorching a large number of equipment and polluting the dust-free workshop needed to make semiconductors. The company initially determined that the cause of the fire was that the current of an electroplating equipment was too large and the heat generated was too high.

According to Huatai Securities Research report, Renesa Electronics is the world's largest supplier of automotive microcontrollers in 2019, with a market share of 31%, followed by NXP (28%) and Infineon (9%).

2/3 of the chips produced in the N3 building are car chips.

At present, production in the N3 building has stopped. Renesas said it would take at least a month to restart operations, with a monthly revenue loss of about $160 million. Akira Minamikawa, an analyst at Omdia, a technology research company, predicts that it may take three months or even half a year to fully restore production capacity, and the fire broke out when the company's chip inventory is low, so the impact is huge.

An Earthquake production in February halted production at the Nake factory for several days, running out of inventory. Masahiko Nozaki, executive vice president of Renesas Electronics, said the company's inventory can only maintain shipments for a month.

Shibata, chief executive of Renesas, said on Sunday that this would have a significant impact on the global supply of chips. Mariko Semetko, a credit analyst at Moody's Japan, said the fire could stifle the recovery in global car production this year.

Nomura Securities believes that due to the stagnation of Renesas shipments, the global production of Japanese auto giants from April to June may be reduced by 1.2 million vehicles.

Shares of Renesas fell 4.9% on Monday, driving shares of Japan's three biggest automakers, Toyota, Nissan and Honda, all down more than 3%.

Shibata said it was working to transfer products from the N3 building to other factories.

According to public data, Renesa's 12-inch production line has only the N3 building, and even if it can be replaced by an 8-inch production line, the utilization rate of Renesas's internal 8-inch fab is already very high. and external fab capacity is also extremely scarce. Therefore, it is difficult to implement the plan to replace production through internal and external factories.

After the epidemic, automobile consumption has recovered strongly, chip manufacturers are not ready to increase production, the supply of automotive semiconductors has been quite tight, Ford, Fiat Chrysler, Toyota and other car companies have announced cuts in car production.

Coupled with the Renesas Electronics Nake factory fire, the world's top three automotive semiconductor manufacturers have appeared supply problems, the shortage of automotive chips may become increasingly serious.

The winter storm in Texas in mid-February forced the production of automotive chip manufacturers such as Infineon and NXP at local wafer factories. According to information released by NXP in early March, its Texas fab lost about a month of production capacity, while Infineon said it would not be able to return to its original condition until June.

Ford said in February that it expected production to fall by 20 per cent in the first quarter of this year, resulting in a loss of between $1 billion and $2.5 billion in pre-tax profits.