Fire at Japanese plant is latest blow to global chip industry

·1 min read

A fire at a semiconductor chip plant in Japan threatens to make life worse for automakers already struggling to get critical chips amid a global shortage.

The big picture: The chip industry was already facing its biggest supply challenge in years amid unexpectedly strong demand, exacerbated by an earthquake in Japan and snow storm in Texas.

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Driving the news: The fire, which occurred Friday at a plant owned by Japan's Renesas, has done serious damage to the facility, with losses estimated at $160 million per month, per the Wall Street Journal.

  • Although the fire only directly damaged a small fraction of that plant's equipment, an entire building will have to be shut down as its operations are all tightly integrated. Renesas said that it aims to get production at the plant resumed within a month. Production at a neighboring Renesas facility can continue without interruption.

  • Two-thirds of the chips made there were used by carmakers, amplifying the impact as carmakers were already curtailing production.

  • Shares of Japan's three major automakers all fell in Monday trading amid the news.

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