29-03-2021 | | By Sam Brown
The recent problems faced by the automotive semiconductor industry has caused worldwide problems with the automotive industry, and now another critical facility faces major delays due to a fire. What has caused the backlog of automotive components, what happened at the Renesas facility, and how will it disrupt the automotive industry?
The semiconductor industry has never been under the amount of pressure it is currently facing, and all of it caused by the many lockdowns around the world as a result of the COVID-19 pandemic of 2020. However, the extreme shortage of components for both the automotive and consumer world is not a result of a simple supply and demand, but instead a series of truly unfortunate events.
When lockdowns were initiated, businesses were forced to shut down, and therefore the demand for vehicles reduced to an all-time low. As a result, automotive manufacturers suspended their production, and this also meant that the demand for automotive components ceased.
However, the consumer electronics world saw spikes in demand for laptops and other office-related components. Since automotive components were not in demand, semiconductor manufacturers switched to producing consumer electronics instead.
When lockdowns ceased and automotive makers saw an increase in demand for vehicles, the demand for automotive components increased, but there were no automotive components available. Semiconductor plants simply cannot produce such parts on the fly, semiconductor production takes many months of steps and checks. As a result, the semiconductor industry is seeing a delay of almost a year for new automotive parts, and many plants are turning their attention to automotive parts which is causing a shortage of consumer electronics.
During a time where semiconductors are in dire need, the last thing that the semiconductor industry needs is increased delays and failure. Well, just when they were most needed, several plants around the world have faced multiple challenges and issues.
In the winter of 2020 / 2021, the state of Texas, which is home to many semiconductor producers, was hit by one of the worse snow storms in Texas history. The resulting storm saw power, water, and gas disruptions which resulted in multiple semiconductor plants shutting down. This disruption is estimated to take as long as 6 months to recover from with Infineon stating that they would not be able to get to normal production levels until June 2021.
To add fuel to the fire (pardon the pun), Renesas has recently announced that a fire has broken out in their N3 building at Hitachinaka. The N3 building is responsible for the production of automotive semiconductors which are already in short supply, and to make matters worse, the building handles 300mm wafers used in cutting-edge technology.
The building itself has not been damaged, but the fire has been able to damage utility equipment. Furthermore, the cleanroom responsible for semiconductor production cannot be entered, and it is believed that the fire (which produces ash and soot), has tainted the area making it unsuitable for producing devices.
Renesas is responsible for critical automotive semiconductor parts including sensor, battery management, and components. Renesas is also the third-largest manufacturer of automotive components (with Toyota Motors being the biggest customers), which shows the serious magnitude of the situation. Such a fire does not need to burn down a building or even cause malfunctions; the ash alone can do intense damage to the highly sensitive production process.
This is not the first time the Renesas N3 facility has been hit by disaster. Back in 2011, the Great Tohoku earthquake (which was responsible for the Fukushima Nuclear Incident), caused major damage to the Renesas facilities including major internal damage to the N3 building.
The recent outages around the world, and their effect on the economy, not only demonstrate the importance of semiconductors, but their sensitivity. While no system is foolproof and protecting against random events such as fires and storms is difficult, systems that are incredibly relied upon should have backups.
In the case of the semiconductor industry, it may be beneficial to consider moving such facilities to remote locations that do not suffer from extreme weather or geography. For example, Japan is a geographically active area with frequent earthquakes, while the northern hemisphere is prone to extreme winter weather. Another solution would be to consider making redundant plants with government backing to ensure that should normal production be adversely affected, semiconductor production can be restarted with minimised delay.
However, semiconductor equipment is monstrously expensive, and having entire facilities on standby not producing devices is wasteful. If those facilities are then put into operation, the market for semiconductor devices would increase (as a result of cheaper parts), and therefore would defeat its own purpose (as more backup facilities would now be needed).
When a steel mill shuts down, or a brick supplier goes bankrupt, the world is rarely affected, if at all. But, as soon as a single semiconductor facility sneezes for just a second, the electronics industry loses its mind. Thus, the question we now ask is “Can the semiconductor industry be stabilised?”.