Japanese automakers assess impact of chip plant fire

Published On: March 22, 2021Categories: Latest News1.8 min read

Toyota, Honda and Nissan ended more than 3.3% lower on concerns over the impact of the fire on production

Toyota, Nissan, Honda and other Japanese automakers scrambled on Monday to assess the production impact of a fire at a Renesas Electronics automotive chip plant that could aggravate a global semiconductor shortage.

We are gathering information and trying to see if this will affect us or not, a Honda spokesman said. Other car makers including Toyota and Nissan said they too were assessing the situation.

The effect on car makers could spread beyond Japan to other auto companies in Europe and the US because Renesas has nearly 30% global share of microcontroller unit chips used in cars.

Renesas said it will take at least a month to restart production on a 300mm wafer line at its Naka plant in northeast Japan after an electrical fault caused machinery to catch fire on Friday and poured smoke into the sensitive clean room.

Two-thirds of production at the affected line is automotive chips. The company also has a 200mm wafer line at the Naka plant, which has not been affected.

Concerns on the impact of the fire on production sent auto shares dropping, with the big three, Toyota, Honda and Nissan, ending more than 3.3% lower. Renesas shares fell as much as 5.5% and finished 4.9% lower. The benchmark Topix index declined nearly 1%.

It will probably take more than a month to return to normal supply. Given that, even Toyota will face very unstable production in April and May, said Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute. I think Honda, Nissan and other makers will also be facing a difficult situation.

Semiconductors such as those made by Renesas are used extensively in cars, including to monitor engine performance, manage steering or automatic windows, and in sensors used in parking and entertainment systems.

Nissan and Honda had already been forced to scale back production plans because of the chip shortage due to surging demand from consumer electronics makers and an unexpected bounce back in car sales from a slump during the early months of the Covid pandemic.

Toyota, which ensured parts suppliers had enough stocks of chips, has fared better so far.

It could take three months or even half a year for a full recovery, said Akira Minamikawa, analyst at technology research company Omdia. This has happened when chip stockpiles are low, so the impact is going to be significant, he added.

About the Author: Jonathan Adams

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