Daily Management Review

Fire Damage At Renesas’ Chip Factory Worse Than Initially Estimated, Says Firm


Fire Damage At Renesas’ Chip Factory Worse Than Initially Estimated, Says Firm
The fire that ravaged the chip making factory of the Japanese chip maker Renesas Electronics Corp situated in northeast Japan has caused much more damage than the company had previously estimated initially, said a spokeswoman of the company on Monday.
The fire at the manufacturing unit which had taken place earlier this month had caused damages to 11 machines in the factory, situated as Naka, the company had estimated about the impact of the fire initially.
However a report in the Nikkei newspaper published on Monday claimed that the company now expects that the number of machines that had been affected by the fire and were rendered completely inoperable is now believed to be about 17, the company has reportedly estimated in its fresh assessments.
While the specific number of completely damaged machines was not confirmed by the Renesas spokeswoman, she said that the extent of the damage caused by the fire would be shared by the company with the media on Tuesday.
Resumption of operations and production at its 300mm wafer line at the plant that was ravaged by the fire will take at least a month, Renesas has said. However the company has said that it will take several months for the company to replace the machines that have been rendered inoperable by the fire.
This extended period when the company will not be in a position to manufacture semiconductor chips will add on to the already acute shortage of such chips globally. The shortage in supply of chips has disrupted production in companies making cars and electronic devices.
About 30 per cent of the global market for microcontroller units used in cars is accounted for by the chips made by Renesas whereas about two thirds of the total number of chips made in the company’s factory affected by the fire is meant for the auto industry.
The share price of the company in Japan inched up a bit on Monday which was in line with the broader Tokyo market.  The news of the fire a week ago had resulted in a fall in the stocks of the company as well as the stocks of some of the large Japanese auto makers.
According to investigations by the company, the fire at the factory was a result of a surge in power in one of the machines. Last month, the company had to stop production for three days at the same factory because of an earthquake. The deadly earthquake that had devastated Japan’s northeast coast because of a consequent tsunami in 2011 had forced the company to keep the same factory shut for more than three months.