Japan Renesas Fire Adds to Woes... Semiconductor Supply 'Sparks' Trouble

Supplier Disasters Continue
Comprehensive Impact on Complete Vehicles and More

A visitor at the Samsung Electronics Delight Exhibition Hall in Seocho-gu, Seoul, is examining semiconductor-related exhibits.
[Image source=Yonhap News]

[Asia Economy Reporters Changhwan Lee, Yujin Jo, Heungsun Kim] As the global industry suffers from a semiconductor shortage crisis, supply chain disasters are compounding the problem. Major semiconductor manufacturing plants are being hit by natural disasters such as cold waves and droughts, and now a shutdown caused by fire has occurred. Consequently, production disruptions in the already struggling automotive, mobile, and home appliance industries are expected to worsen, and the upward trend in semiconductor prices is likely to continue for some time.

On the 21st (local time), according to Bloomberg and Nihon Keizai Shimbun, Renesas Electronics, the world's third-largest supplier of automotive semiconductors based in Japan, held a press conference and announced that it would take at least about a month to resume production at its main plant in Naka, Ibaraki Prefecture, following a fire that occurred on the 19th. Renesas CEO Hidetoshi Shibata said, "We aim to restart the plant within a month, but uncertainties remain," adding, "This production halt could have a significant impact on the global semiconductor supply shortage."

Renesas May Take Up to Six Months to Resume Normal Supply
Automotive Semiconductor 'Shortage' Expected to Worsen

The fire at the Renesas plant occurred in the production line for 300 nm diameter wafers (substrates used to imprint circuits on semiconductor chips). Renesas is a leading company in the microcontroller unit (MCU) sector that controls vehicle power, accounting for 20% of global MCU production. It ranks third worldwide by sales and counts Toyota, Honda, and Nissan among its major customers.

Previously, this plant also suspended operations for about three months following the Great East Japan Earthquake in 2011, which severely impacted automakers. Nihon Keizai Shimbun compared this fire to the 'Renesas Shock' during the earthquake, forecasting that if the current shutdown prolongs, the ongoing global shortage of automotive semiconductors will worsen further.

Sanjiro Fukao, senior researcher at Itochu Economic Research Institute, predicted, "This fire could affect automotive semiconductor procurement for about six months." If it takes at least one month to resume production and three months to normalize supply, semiconductor supply disruptions could last up to six months.

Domestic Automakers on Alert
Hyundai Motor and Kia Hold Daily Supplier Meetings

The Renesas plant fire is also expected to impact Hyundai Motor Group to some extent. If Japanese automakers, unable to receive parts from Renesas, turn to other semiconductor suppliers, supply shortages will be inevitable.

Hyundai Motor and Kia are intensifying efforts internally to secure inventory, anticipating worsening parts shortages. They have recently shifted from irregular to daily meetings with automotive semiconductor suppliers. For parts with severe shortages, they are negotiating directly with semiconductor companies without going through partners.

Price increases for automotive semiconductors are also a concern. Suppliers currently providing semiconductors to Hyundai Motor and Kia are reportedly purchasing chips at higher prices than usual. An industry insider said, "The semiconductor shortage is leading to price hikes, which could ultimately result in higher consumer prices or overall profit declines for automakers."

Samsung's U.S. Plant 'Shutdown'... TSMC Faces Water Shortage
"Product Price Adjustments Possible Around Q2"

The disasters affecting the semiconductor industry are impacting not only automakers but the entire sector. Samsung Electronics' foundry plant in Austin, Texas, has been closed for over a month since January 17 due to power shortages caused by a local cold wave and heavy snow. Samsung ranks second globally in foundry services and has been mass-producing semiconductors for mobile devices, whose demand surged during the COVID-19 pandemic. Meanwhile, Taiwan's TSMC and UMC, ranked first and third in foundry globally, are facing water shortages for their semiconductor plants due to local drought. Earlier, a fire also broke out at Unimicron's printed circuit board (PCB) plant in Taiwan, one of the world's top three semiconductor substrate suppliers.

Concerns have been raised that these issues may intensify soon. Samsung Electronics' IT & Mobile (IM) division head, Dongjin Koh, said at the regular shareholders' meeting on the 17th, "There is a severe imbalance between supply and demand for IT semiconductors worldwide," adding, "We are meeting with partners and our staff are working daily on parts supply issues, but Q2 looks challenging."

An industry insider said, "It takes about a month and a half from wafer production to finished products. Considering this, supply issues could become severe around Q2, or current conditions may be reflected in product prices."

This content was produced with the assistance of AI translation services.