(Bloomberg) – Japanese automakers fell on Monday after a fire unexpectedly stopped one of Renesas Electronics Corp.’s largest chip manufacturing plants, exacerbating the growing global shortage of semiconductors in the car.
Renesas slipped to 5.4%, while customers of Toyota Motor Corp to Honda Motor Co. slipped. and Nissan Motor Co. also declined in early trading. Renesas, one of the largest suppliers of car chips, was forced to stop a Japanese plant on Friday after a fire broke out in one of its clean rooms, critical areas designed to contaminate semiconductor impurities.
Toyota said Monday that it is trying to determine the consequences of the unexpected shutdown, which could ripple in an industry that is already struggling to get assembly tires working during a severe shortage of chips. The fire in Renesas is likely to exacerbate a predicament stemming from huge demand for home and work equipment during the pandemic, which was estimated earlier this year to lose global carmakers about $ 20 billion in sales in 2021.
CEO Hidetoshi Shibata warned that the plant could be shut down for a month and cost the company 17 billion yen ($ 156 million) in revenue.
“I’m worried it will have a huge impact,” Shibata told a news conference on Sunday after the fire.
Renesas, which generated revenue of 715.7 billion yen last year, gets about 6.6% of its sales through Toyota, according to Bloomberg’s supply chain analysis. The Japanese carmaker also warned that shortages of semiconductors caused by cold weather would force it to shut down a factory in the Czech Republic for two weeks. A Toyota representative said he was investigating the possible impact of the Renesas outage, but has nothing more to share at the moment.
“It’s becoming a negative story,” said Takeshi Miyao, an analyst at independent researcher Carnorama. “Production shrinks, and does not increase, so the balance between supply and demand only gets worse.”
Read more: Headache for providing fire and ice attenuation for automotive industry
Read more: Headache for providing fire and ice attenuation for automotive industry
Shibata told Bloomberg News earlier in March that the shortage could continue into the second half, and began working with other industry leaders to create a crisis to curb car and equipment production over the summer.
‘It’s terrible for the car supply chain; they may have to move to keep more inventory, ‘said Bloomberg Intelligence analyst Masahiro Wakasugi about the fire in Renesas.
Renesas has production facilities at six locations in Japan. The N3 building where the fire broke out is home to 300 millimeter wafer production, which will make it one of the company’s more advanced lines. In 2019, Renesas was the third largest manufacturer of silicone in the car. Along with Toyota, Renesas counts the Japanese distributor of personal electronics manufacturers, Ryosan Co., among its largest customers, according to the Bloomberg analysis. Car manufacturers, including Volkswagen AG, are also customers, with Honda Motor Co. and Nissan Motor Co. which contributes about 2% of sales per piece.
“The supply will remain tight in the first half of the year,” Shibata said in an interview published on March 12. ‘And as things stand now, the situation will continue in the second half. But this is anyone’s guess. ‘
Read more: Renesas says: a shortage of brand new manufacturers could last until the end of 2021
(Updates to Toyota’s comment in sixth paragraph)
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