TOKYO -- Renesas Electronics expects to restore full production capacity at a key semiconductor factory by the end of June following a fire there three months ago, though how quickly the automotive supplier can bring shipments back up to speed remains unclear.
The N3 building at the Naka factory, which produces mainly automotive microcontrollers, shut down after the March 19 incident. More than 95% of the facility's capacity has been restored since its April 17 reopening, a source familiar with the matter said. Further adjustments are needed to consistently achieve pre-fire levels of production.
The Renesas fire, along with a widespread power outage in the U.S. state of Texas, exacerbated the global chip shortage that began in late 2020 and has hampered many industries. The automotive sector in particular was hit early and hard, since a car requires roughly 1,400 semiconductors to make.
The facility, located northeast of Tokyo, was initially expected to recover 50% of its capacity by the end of April and resume operating at full capacity by the end of May, though only 88% of its capacity had actually been brought back online by then.
Chipmaking equipment operates at the nanometer scale, meaning that production lines need careful calibration to ensure stable output and quality. Renesas replaced many pieces of equipment after the fire, delaying the plant's full recovery.
Overall, the company is still largely on schedule in recovering from the fire. But the scope of the impact on automakers will depend on how quickly shipments can be brought back to pre-fire levels.
Semiconductors have a long lead time. Renesas could minimize delivery delays if it can make up for lost time in the latter half of the production process.
The chip shortage will dent auto production by about 3.9 million units in 2021, costing automakers $110 billion in revenue, according to U.S.-based consulting firm AlixPartners.
A lack of chips needed to activate liquid crystal displays has also delayed the release of several new TV models and caused a shortage of GPS systems. Japan Display projects a roughly 30 billion yen ($272 million) dent to full-year sales due to the chip shortage.
In response, manufacturers have scrambled to secure semiconductors, depleting existing inventories. This has led to a surge in back orders, as well as new contracts for deliveries four months or more in the future.
"Demand is outpacing supply across all types of semiconductors, and the shortage will continue for the next year or two," said Yuichi Koshiba, managing director for Boston Consulting Group in Tokyo. Chipmakers will likely need to continue operating at or near full capacity for some time, making it critical for companies like Renesas that their production lines can handle the load.