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Renesas Says Fire-Hit Chip Plant to Restart By Mid-April

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Pavel Alpeyev
·3 min read
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(Bloomberg) -- Renesas Electronics Corp. said production at a semiconductor factory hit by a fire is on track to resume by mid-April, welcome news from one of the top providers of automotive chips amid a global shortage.

One of the company’s most advanced lines at its plant in Naka, north of Tokyo, has been halted since a fire broke out late on March 19. Production will resume after about a month, as Renesas had previously projected, Chief Executive Officer Hidetoshi Shibata said at a briefing in Tokyo on Tuesday.

A recovery to full production may take 100 days, he said, though progress in the damaged clean room is ahead of schedule. About three-quarters of the work in progress was undamaged by the fire, he added.

“We are increasingly confident in our chances of achieving the goal,” Shibata said in the online briefing.

Booming demand for laptops, tablets and other electronics from people stuck at home during the pandemic triggered a semiconductor shortage late last year that has since snarled production of everything from automobiles to gaming consoles. Car manufacturers got hit particularly hard and are expected to miss out on $61 billion of sales this year alone.

Renesas, whose chips are used by all the major automakers including Toyota Motor Corp., Ford Motor Co. and Nissan Motor Co., gets about half its revenue from car chips.

The fire’s impact on the Japanese chipmaker’s sales may range between 17.5 billion ($160 million) and 24 billion yen, he said. The company, which had previously estimated the damage to be 17 billion yen, said it discovered an error in earlier calculations. The company last month forecast total annual revenue of 711 billion yen.

“That’s about 3% of revenues at the highest projection,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors in Singapore, wrote in a note to clients. “Storm in a teacup!”

The World Is Short of Computer Chips. Here’s Why: QuickTake

Renesas shares trimmed losses after the CEO’s comments and closed less than 1% lower in Tokyo.

The fire at a production line handling 300-millimeter wafers blazed for five and a half hours, damaged 23 pieces of equipment and burned a 600 square meter production area, or about 4% of the clean room space. A plating machine caught fire due to an overcurrent, the cause of which remains unknown, the company said.

The Naka plant makes chips used in automotive and industrial applications. Its products range from mid- to low-end microcontrollers, 90-nanometer analog chips for car applications and 40-nanometer microcontrollers and system-on-chip devices. The factory was running over capacity when the fire broke.

“There won’t be any big departures from our plan of getting back to 100%,” Shibata said.

(Updates with CEO’s comment in fourth paragraph)

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