When we worked on the Phaeton launch in 2001, we said it had “more computers than a small company.” It had 56. Today’s cars have anywhere between 30 and 100 computers on board. They are small microcontrollers that typically chat with each other via a CAN bus. You don’t take just any microcontroller for the job. They need to hold up to the harsh environment inside of a car. Their makers need to hold up to the harsh environment presented by the purchasing departments of automakers that squeeze them for every penny. As a result of both, there are only a few players in this field. This is the story of one of them.
Renesas controls about 41 percent of the global market for automotive microcontrollers, says Automotive News [sub]. EE Times gives them only 11 percent. But all agree, Renesas is the largest in the automotive field. The world’s largest automaker, Toyota, is said to be the largest customer of Renesas.
Renesas, which had merged with NEC Electronics, has 90 percent of its global capacity in Japan.
If you want to relive how the chip giant was battling with the damage caused by the earthquake and tsunami, how they coped and cope with the power outages, then you find the blow-by-blow here.
From the first notice on March 14, the Monday after the quake (7 out of 22 factories down, 8 impacted by power outage) to the last one from just two days ago. In this notice, you see that Renesas is slowly getting back to normal, except for one fab: The Naka fab, in Hitachinaka-shi, Ibaraki Prefecture . This plant is listed as “Temporarily shutting production.“ The plant is down for the duration, tentative target date for re-opening: July 2011. Or thereabouts.
The trouble is, fate wanted it that “Renesas’ Naka plant in northeastern Japan accounts for about 25 percent of its global automotive microcontroller capacity,” says Automotive News. If the world’s largest supplier of automotive microcontrollers loses a quarter of its capacity, someone will get hurt.
According to AN, Renesas will most likely shift production from Naka to other Renesas fabs in Japan or Singapore. And now digest this quote from the report:
“But that transfer will account for less than half of Naka’s output, and it could be another two months before production starts up at those sites.
The manufacturing process for microcontrollers, or MCUs, can take up to two months, meaning that it could be another four months before those new sites are sending finished products to customers.”
Renesas thinks it can fill “approximately 70 percent of the customer orders currently in place with the Naka factory that are requested to be delivered by the end of May, from the finished goods already in stock and work-in-process goods in the assembly lines.”
After that, Renesas President Yasushi Akao is hoping for the “kind understanding and support” from his customers.
This little spotlight shows that things are not as clear cut as they appear. Nothing happens for a while. The first impact from Naka will be felt in June, when 30 percent of the orders remain unfilled. The second impact will hit when the deliveries are used up, and new chips won’t be flowing until September. These are no chips you can order from the Digikey catalog. These are specialized chips for special applications. Sourcing them from another manufacturer would take even longer.
Last night’s 7.1 magnitude aftershock left four Renesas fabs in northern Japan without power, says Reuters. It is unclear when production will be restarted.
And this is just one out of many suppliers.
Update: The Japanese government just chimed in (via The Nikkei [sub]: If production of the “key automobile component”, (namely the microcontrollers) “does not resume for the six-week period through the end of April, it could result in a loss of around 6.5 trillion yen for auto manufacturing worldwide, according to the government estimate.” According to my calculator, that is $ 76.4 billion. The reader of the above knows by now: At least 25 percent of the supply will be missing for a while.