Chip maker Renesas shifts production following factory fire
Renesas Electronics, the beleaguered Japanese chip manufacturer hit by a fire in mid-March, will reportedly move a portion of its production to a facility several hundred kilometres away.
Production at the firm's main facility in Naka, located in Ibaraki prefecture, north east of Tokyo, was halted after a blaze tore through the first floor of one of its factories on 19 March. Renesas will now move some of its manufacturing capacity to a factory in the Ehime prefecture, on Shikoku island.
Renesas factory fire worse than initial reports
Initial reports found 11 manufacturing units were affected by last month’s fire, though a more recent audit brings that figure to at least 23. In a press conference, the company said it expects to replace around half the damaged units in April, though there is no definitive timeframe on when the remaining equipment will be replaced.
A PR representative for Renesas told Supply Chain Digital : "We have scheduled for some equipment within the [remaining] 12 units to be procured within May, and some remain uncertain – it could be as early as April, or May, or June."
“We are in discussions with equipment manufacturers to procure the equipment at an earlier date where possible,” the company said earlier, in a statement.
If it is able to procure manufacturing equipment within this timeframe, the company hopes to begin shipping products that were work-in-process 60 days after the fire. Full capacity is expected within 100 days of the blaze.
“However, this is with the premise that all necessary manufacturing equipment can be procured by the end of April, and if there are delays in the procurement, the time it takes to recover to 100% of the product shipment volume before the fire will be also delayed,” the company added in a statement.
Renesas is one of the world’s largest semiconductor manufacturers for the automotive industry, which has been plagued by a chip shortage during the pandemic. This most recent hit to Renesas’s production follows an earthquake in February, which caused a three-day shutdown.
Car supply chain disrupted
Car manufacturers around the world have been impacted by a global shortage of semiconductors, a vital component in modern cars, which has in turn disrupted the industry’s entire supply chain.
Richard Barnett, Chief Marketing Officer at Supplyframe, said the shortage “points to the need for this sector and others that rely on semiconductors to leverage new forms of intelligence to better understand electronics supply chain dynamics and build resiliency into their new product designs and electronic component procurement strategies.”
A group of US car manufacturers, including GM, Ford, and Volkswagen, has called on the government for aid, warning that the shortage could result in around 1.3 million fewer vehicles being built in 2021 - and continuing disruption for at least six months.
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.