Renesas factory fire exacerbates global semiconductor shortage

Just as the world faces a shortage of semiconductors for automobiles, a situation has occurred that could have a damaging effect on Japan’s car production. The public and private sectors should make every effort to minimize the impact.

At major semiconductor manufacturer Renesas Electronics Corp.’s Naka factory in Hitachinaka, Ibaraki Prefecture, a fire broke out in mid-March and its main production lines have been shut down. It will reportedly take about a month to resume production, and shipments are not expected to return to normal until June or July.

The Naka plant manufactures microcontrollers, semiconductor devices that help control vehicles such as in the way they travel. Renesas is the world’s top producer of microcontrollers for vehicles.

Japanese automakers depend on Renesas for most of their microcontrollers and are likely to be forced to reduce production. Since the automobile industry is one of Japan’s core industries and has a broad base, it is imperative that the economy as a whole will not be adversely affected by large cuts to production.

Nearly 1,000 people from Renesas’ business partners have been dispatched to the factory to support the restoration efforts. First of all, utmost efforts must be made to restart production.

Renesas initially announced that 11 of its approximately 600 manufacturing equipment units were damaged, but it turned out that 23 units were damaged. The company needs to speed up its procurement of replacement equipment.

Renesas intends to proceed with production at its other factories in Japan and outsource production to Taiwan manufacturers, among other measures. The government is also requesting Taiwan’s cooperation. All possible alternative production methods must be explored.

The investigation into the cause of the fire is also essential. The blaze reportedly started in plating equipment, but it is not known why the fire broke out. It is important to thoroughly examine the situation and take all possible measures to prevent a recurrence.

The Naka plant was also affected by the Great East Japan Earthquake, which disrupted global automobile production. Based on the lessons learned, the company has been striving to establish a system of substitute production in the event of a disaster. The company needs to reexamine its business continuity measures.

In addition to microcontrollers, there is a wide range of semiconductors for automobiles and the demand for them is increasing. Even before the fire, the global automotive industry was experiencing a shortage of semiconductors.

This shortage has been caused by the sharp recovery in auto sales after the novel coronavirus pandemic caused a plunge, and competition from the strong demand for smartphones and other devices has made procurement difficult.

In February, power outages caused by a cold spell in Texas suspended operations for automobile semiconductor companies there, such as those related to European makers, further putting pressure on supply and demand.

Countries around the world are urgently making efforts to secure semiconductors, which are not limited to use in automobiles but are essential to industrial activity. Japan has strengths in the fields of manufacturing equipment and materials. It is hoped that Japan will aim to utilize those advantages to enhance its production base in cooperation with other countries.

— The original Japanese article appeared in The Yomiuri Shimbun on April 4, 2021.