Parts Paralysis: A Shuttered Chip Plant Could Cost Up To 11 Million Cars Worldwide
A shortage of engine-related micro control units (MCUs) resulting from damage to Japan’s Renesas Electronics plant in Naka will curtail global auto production, says the market intelligence service ICSIS, citing a report by Germany’s Deutsche Bank. Renesas Electronics is the world’s biggest maker of automotive microcontrollers. It more and more emerges as a “key bottleneck in Japan’s parts shortage,” says Automotive News [sub]. One of its two auto-related factories damaged by this month’s earthquake won’t be operational until July.
Renesas supplies 18-20 percent of the world’s automotive MCU market. About 70 percent of the production is sold to Japanese automakers, the remaining 30 percent goes to US and European car companies. “The supply of these MCUs is not easily replaceable,” says ICSIS, “as boosting production at other sites could take as long as six to nine months.”
Renesas has only recently turned the lights back on at its Naka plant in the disaster zone. Engineers are now assessing damage to clean rooms and wafer fabrication lines.
Deutsche Bank estimates that 12 percent of the U.S. Big Three production is affected by the MCU disruption. In a worst-case scenario, global auto production of around 76m units last year could be reduced by 7.5 million to 11 million units, or 10-14 percent, say the bankers.
If Renesas is a bottleneck, power shortages are a huge barrier. As reported two days ago, car companies are thinking about rotating rationing. According to a report by Automotive News [sub], the electronic industries don’t want to be left behind and demand rotating production holidays between the automotive and electronics industries. This, or an overall reduction in electricity use in exchange for a minimal but steady supply, are seen as the likely options by the Japan Automobile Manufacturers Association, says Automotive News. In summer, Japan is estimated to be battling a power shortfall of 25 percent. Whatever option will be taken, power consumption and thereby production will be curtailed sharply for a long time.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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btw, wouldn't this be agood time for the chip supplier to explore taking-over or doing a jv before the business is moved anyway?
@ John Horner My memory of these plants is from a few years ago, but I believe it's more complex than Bertel's report would indicate. These are not simple IC fabs, but assemblers/providers of complete controllers, or tested boards at least. Moving that capability would certainly be non-trivial. Vibration and temperature hardened devices like this aren't made like regular computing devices.