At a time of chip shortage, Renesas announced that it will increase its microprocessor capacity by more than 50%.

As chip shortages continue to limit production of automotive and consumer electronics, Japan's Renesas (Renesas), one of the world's largest automotive chip makers, announced on Wednesday that it would increase its supply capacity of microprocessor (MCU), a key component of cars and electronics, by more than 50 per cent by 2023.

The global chip shortage continues, and the market expects it to continue next year or even 2023. In this context, Japan's leading automotive MCU company Renesa Electronics decided to expand production.

Renesas said at a business briefing on Wednesday that it planned to increase its high-end MCU production capacity by 50 per cent from 2021. This means that by 2023, Renesa's high-end MCU production (translated into 8-inch wafers) will reach about 40, 000 pieces per month, which will mainly rely on the fab production line.

In terms of low-end MCU production, Renesas plans to increase its production capacity by 70% to 30, 000 wafers per month by 2023 (after translating into 8-inch wafers), mainly by increasing the capacity of Renesas's own factories.

Renesas's backlog of orders for cars has increased by about 30 per cent since the end of June. Despite the increase in supply, the gap between supply and demand has not been filled so far. Given the strong demand, Renesas has raised its long-term target for operating margins from 20 per cent to 25-30 per cent.

Renesa CEO Shibata Yingli said that the company's orders next year are also accumulating, and it is uncertain whether it will be able to meet customer demand, and looking forward to the whole of next year, it is not clear that the imbalance between supply and demand can be alleviated.

Renesas announced on Wednesday that it will invest more than 80 billion yen ($715 million) in capital investment in 2021, some of which will be used to repair the Naka plant that caught fire in March and try to make its facilities more flexible. The company also plans to increase capital expenditure by another 60 billion yen in 2022.

Renesas's determination to expand chip production and supply is evident after a capital investment of about 20 billion yen a year.

Automotive chips are very important to auto companies such as Tesla. A fire broke out at the Renesas Naka chip factory in March, exacerbating the crisis of shortage of automotive chips.

Tesla CEO Musk tweeted in August that Tesla had encountered extreme supply chain constraints in some "standard" car chips, with Renesas and Bosch by far the biggest problems.

According to reports, supply chain sources have revealed that there is no sign that the chip shortage will ease, and the shortage is not expected to ease until the second half of next year.