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Automotive chip maker says it's nearly recovered from blaze

Explainer Worsening Chip Shortage
Posted at 12:54 PM, Jun 01, 2021
and last updated 2021-06-01 12:54:14-04

DETROIT, Mich. (AP) — A fire-damaged Japanese factory that supplies many of the auto industry's computer chips is producing about 88% of what it was making before the March blaze, its owner says.

Renesas Electronics Corp. said Tuesday that replacements for fire-damaged equipment arrived on May 27, and should be running in mid-June. That would allow the company to return to full production.

The March 19 Renesas fire and a worldwide shortage of computer chips have wreaked havoc on auto industry production schedules, forcing companies to cut production and allocate scarce chips to higher-margin models. The production cuts have crimped the supply of new vehicles just as demand recovers from the coronavirus pandemic, causing shortages and raising new vehicle prices. Used vehicle prices have hit record levels.

Ford, for instance, said it the shortage would halve its production from normal levels in the second quarter. CEO Jim Farley said Renesas produces two thirds of the semicondutors for the auto industry. Nearly all automakers have been affected but Ford, General Motors, Nissan, Honda, Stellantis, Tesla and Volkswagen have been hit.

Even with the Renesas plant back in action, it's likely to take months for production to catch up with shortages. There are as many as 80 different computers in more sophisticated models that control everything from touch screens to transmissions to partially automated driver safety features.

Automakers closed factories for about two months at the start of the pandemic last year to help stop it from spreading. But they came back faster than expected, and by then, chip makers had switched production to booming consumer electronics. Then the Renesas fire hit.

The shortage is forcing the auto industry to rethink its supply chains and perhaps scrap some just-in-time parts deliveries.