Renesas Chip-Plant Fire Spreads Concerns About Global Auto Production

TOKYO—A fire at a factory of one of the world’s leading auto chip makers has added to the troubles of car makers that already have slashed production because of a semiconductor shortage.

The fire Friday left a swath of charred equipment in the factory owned by a subsidiary of

Renesas Electronics Corp.

RNECY -2.99%

in Hitachinaka, northeast of Tokyo. The company said it would take at least a month to restart the damaged operations.

Shares of Japan’s three leading car makers—

Toyota Motor Corp.

TM 0.55%


Nissan Motor Co.

NSANY 3.68%


Honda Motor Co.

HMC 3.78%

—all fell by more than 3% on Monday, worse than the overall market, while Renesas shares were down 4.9%.

The company said a power surge caused the fire.


Renesas Electronics Corp.

Renesas said a power surge caused the fire and contaminated clean rooms needed to make semiconductors. It said two-thirds of the affected production lines were making automotive chips.

Renesas’s chief executive,

Hidetoshi Shibata,

said Sunday the impact on global chip supplies would be significant.

Mariko Semetko,

a credit analyst at Moody’s Japan, said the fire was likely to damp the recovery of global auto production this year, while auto makers said they were still assessing the impact.

Mr. Shibata said the company was trying to make up for the lost production at other plants but didn’t know whether that was possible. The company estimated the revenue losses at the equivalent of $160 million a month.

Car makers have already been struggling with a shortage of semiconductors stemming in part from an unexpectedly strong comeback after the coronavirus pandemic hit last year. That left factories ill-prepared to increase production quickly.

Ford Motor Co.

F 2.72%

said in February it expected to cut output by up to 20% in the first quarter of this year, costing the company $1 billion to $2.5 billion in pretax profit.

Problems at Renesas were already contributing to the semiconductor bottlenecks. An earthquake in February halted the Hitachinaka factory for a few days, trimming inventory. Renesas’s executive vice president,

Masahiko Nozaki,

said the company had inventory to maintain shipments for only a month.

The earthquake and fire carried a feeling of déjà vu for Renesas, because the same factory was one of the hardest-hit by eastern Japan’s devastating earthquake on March 11, 2011. It was offline for about three months and mobilized thousands of people including customers’ workers to make repairs.

The factory took on a bigger role recently during the chip shortage. Renesas said earlier this month it had brought back to Japan some production originally outsourced to

Taiwan Semiconductor Manufacturing Co.

TSM -0.76%

, in a bid to meet customer demand more quickly. The fire will delay part of that production, Renesas said.

Write to Yang Jie at [email protected]

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