Renesas fire, the three automotive MCU giants are in a dilemma of suspension of work

Figure: Renesas reported the latest fire situation on March 21

Image source: Renesas official website

Shibata said that Renesas Electronics plans to resume production at the Naka plant N3 building (12-inch chip production line) affected by the fire on Friday , which produces about two-thirds of automotive chips, within a month . A one-month suspension of production could result in a loss of 17 billion yen (US$156 million) in revenue.

According to information disclosed by the media, after investigation, local police and firefighters initially believed that the cause of the fire at Renesas was that the electroplating equipment on the first floor of the N3 building caught fire due to excessive current. Because the heat resistance of the equipment shell and the electroplating tank is relatively low, if the current is too large, there will be a risk of fire. However, the cause of the excessive current has not yet been determined.

Figure: The scene of the fire in the factory

Image source: From Renesas online press conference materials

The fire destroyed 11 pieces of equipment, accounting for 2% of all semiconductor production equipment. The factory was filled with smoke, which then entered the clean room. In semiconductor factories, clean rooms are key facilities, mainly used to prevent external impurities from contaminating semiconductor products. Shibata Hidetoshi also said that it may take more than a month to replace all the damaged equipment, which will affect the company's timely resumption of production.

Renesas reportedly discussed internally whether to conduct alternative production at its own factories or outside, but only the damaged Naka factory has a 12-inch chip production line. Even if alternative production is carried out using an 8-inch production line for small quantities and a wide variety of products, the operating rate is high due to the impact of alternative production at Asahi Kasei's semiconductor factory, which also stopped production due to the fire, and it may be difficult to make up for the lost production capacity of the Naka factory due to the shutdown.

Renesas said it plans to have its other semiconductor factories produce some automotive chips, accounting for about two-thirds of the production halted at the damaged factories.

The production line shutdown caused by the fire is a further blow to the supply of automotive chips. Renesas Electronics is among the top ten semiconductor suppliers in the world, and the chips it produces are used in mobile communications, automotive electronics and other fields.

Figure: Global MCU market share in 2020

Image source: Nikkei News

Renesas holds about 20% of the global automotive semiconductor market, and 17% of the MCU market. Sanshiro Fukao, a senior research fellow at Itochu Research Institute, pointed out that "it is highly likely that the automotive industry will have difficulty procuring (semiconductors) for about half a year."

In the current environment of automotive chip shortage, Renesas has extremely limited inventory. Renesas said that currently "including semi-finished products, there is only one month of inventory." According to Nikkei News, a head of a Japanese semiconductor trading company believes that including agents who connect manufacturers with customers, the inventory reaches 2 to 3 months, and "large automobile companies and parts companies basically have no inventory." Even if the inventory being produced is used to supply as soon as possible, it will take more than 3 months to restore the supply level before the fire.

Renesas' main customers are Toyota, Honda and Nissan. According to the latest reports, Toyota is evaluating the impact of the shutdown of Renesas Electronics' factory. Currently, due to the shortage of semiconductor supply, Toyota's small car factory in the Czech Republic will suspend production for two weeks.

Honda said on the 21st, “ Although there will not be an immediate impact, if the shutdown lasts for a month, production may be affected after April when inventory starts to run out ,” and “In order to avoid shutdowns, we will coordinate measures such as replacing products with products other than Renesas.” Toyota will also conduct a detailed investigation into the number of vehicles affected by production, taking into account changes in production models and the possibility of alternative production.

Akira Minamikawa of the British research company Omdia commented on the Renesas incident, saying, "With Japanese domestic companies at the center, the global impact will probably be no less than tens of thousands of vehicles."

What is more alarming is that due to the large-scale power outage caused by the cold wave in Texas in February this year, ENIP and Infineon Technologies, which occupy the first and third share in the global automotive MCU supply market, have stopped production at their local factories. ENIP recently announced that the power outage in Texas had caused a loss of about one month's production capacity, while Infineon Technologies said that the Texas factory was severely affected and would not be able to resume its original production capacity until June this year.

Coupled with the Renesas fire, the production capacity of the top three automotive MCU suppliers has all been affected by the shutdown , the hidden dangers of automotive chip supply have increased, and the impact of chip shortages may spread further.

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