Renesas Electronics Corporation (TSE:6723), a premier supplier of advanced semiconductor solutions, today held a second press conference regarding the occurrence of a fire on March 19, 2021 at 2:47 am at part of the processes in the N3 Building (300mm line) of Naka Factory (located in Hitachinaka, Ibaraki Prefecture) of Renesas Semiconductor Manufacturing Co., Ltd, a wholly-owned manufacturing subsidiary of Renesas. The press conference covered the outlook and initiatives taken for resuming production. The contents of the press conference are summarized below. Once again, we would like to give our sincerest apologies to neighboring residents, customers, partner companies, relevant authorities and all those involved for the trouble.
Friday, March 19, 2021: Notice Regarding the Semiconductor Manufacturing Factory (Naka Factory) Fire
Saturday, March 20 2021: UPDATE 2 – Notice Regarding the Semiconductor Manufacturing Factory (Naka Factory) Fire
Sunday, March 21, 2021:UPDATE 3 – Notice Regarding the Semiconductor Manufacturing Factory (Naka Factory) Fire (summary of the contents of the first press conference)
1. Date and time of the press conference
Tuesday, March 30, 2021 at 2:00 pm to 3:20 pm JST
2. Speakers at the press conference
Hidetoshi Shibata, Representative Director, President and CEO
Masahiko Nozaki, Executive Vice President, General Manager of Production & Technology Unit
Shuhei Shinkai, Senior Vice President and CFO
3. Overview of the press conference
Progress on the investigation into the cause of the fire
On March 21, 2021, an investigation led by the manufacturer of the equipment which was the cause of the fire was held, and on March 23, 2021, a detailed investigation led by external specialists dispatched by the equipment manufacturer was held. In addition, on March 25, 2021, the fire department revisited the site to conduct an investigation but was unable to determine why the equipment caught on fire and the cause is still under investigation.
Impacts and recovery status
We are receiving tremendous assistance from customers, equipment manufacturers, partner companies and construction companies, and they are working with Renesas employees to recover the clean room as early as possible. The beam reinforcement within the clean room was completed on March 29, and the procurement of materials used in clean rooms such as filters as well as the clearing of soot etc. is progressing mostly on track. The clean room is expected to be recovered by around mid-April.
Around three-quarters of the work-in-process products being manufactured in the N3 Building were not damaged and can be turned into finished products.
In addition, we have completed investigation of damages caused by fire for over 90% of the manufacturing equipment inside the first floor of the N3 Building at this current time. As a result, in addition to the initially announced 11 units of burned equipment, there were additional 12 units of equipment that was affected by the fire. Within the total of 23 units, 11 units (approximately half of the total number of units) are to be procured within April. On the other hand, some equipment may not be procured until after June. We are in discussions with equipment manufacturers to procure the equipment at an earlier date where possible.
Manufacturing and shipment status
We aim to complete recovery of the clean room of the N3 Building by around mid-April and resume production in one month as initially announced. Although this will depend on the product, following the lead time of a typical product, if we are able to procure all necessary manufacturing equipment by the end of April, we expect to begin product shipment to our customers of the remaining work-in-processes of the first floor of the N3 Building in approximately 60 days after the fire. In approximately 90 days after the fire, we expect to begin product shipment to our customers of the remaining work-in-process of the second floor of the N3 Building, leading to the expectation of 100% recovery of product shipment of products manufactured in the N3 Building to customers approximately 100 days after the fire. 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.
Plans for alternative production
Approximately two-thirds of the products manufactured within the N3 Building can technologically be alternatively produced in-house or outsourced. If 1.5 months’ worth of the N3 Building’s manufacturing capacity is alternatively produced, we expect approximately 100% of products to be outsourced and 82% of products can be produced in alternative in-house factories. If 2 months’ worth of the N3 Building’s manufacturing capacity is alternatively produced, we expect approximately over 90% of products to be outsourced and 73% of products can be produced in alternative in-house factories.
We initially announced that the financial impact from halting the N3 Building production is approximately 17 billion yen per month, but this figure included production from other production lines. We therefore revised the figure to approximately 13 billion yen per month. Including the impact of the fire and the finished product inventory worth approximately 2 billion yen in mind, if the N3 production capability took 1.5 months to recover to 100%, the financial impact is expected to be approximately 17.5 billion yen, and if it took 2 months to recover, the financial impact is expected to be approximately 24.0 billion yen. In addition, marginal profit reduction due to decrease in revenue is expected to be approximately 60% in amount against the revenue impact. Inventory disposal, fixed assets impairment and repairment costs are expected to arise as well. We also expect procurement costs of replacing manufacturing equipment impacted by the fire as capital investments, but we are currently confirming the details and will make further announcements once more information is available.
Renesas will continue to strive for the safety of the community and with the support of the fire department and the police as well as the relevant authorities, we will conduct a thorough investigation to the cause and work to prevent a reoccurrence.
About Renesas Electronics Corporation
Renesas Electronics Corporation (TSE: 6723) delivers trusted embedded design innovation with complete semiconductor solutions that enable billions of connected, intelligent devices to enhance the way people work and live. A global leader in microcontrollers, analog, power, and SoC products, Renesas provides comprehensive solutions for a broad range of automotive, industrial, infrastructure, and IoT applications that help shape a limitless future. Learn more at renesas.com. Follow us on LinkedIn, Facebook, Twitter, and YouTube.