Business / Corporate

Renesas to halt six plants in Japan for up to two months

JIJI

Major Japanese chipmaker Renesas Electronics Corp. will halt six domestic plants for up to two months due to China’s economic slowdown, informed sources have said.

The Chinese slowdown has dented demand for semiconductors for industrial machinery and consumer electronics, according to the sources.

The six factories, including the Naka plant in Ibaraki Prefecture, will stop for about a month from late April and for another month in August, the sources said. The other five factories are in the prefectures of Gunma, Shiga, Yamaguchi, Ehime and Kumamoto.

Renesas will pay leave benefits to workers at the six plants during the suspensions.

The company is also considering halting three other domestic plants, in Yamagata, Oita and Kumamoto prefectures, and four overseas factories for weeks, the sources said.

The Chinese economy started to decelerate in November last year, causing some Japanese producers of electronic parts and machine tools to lower their earnings estimates for the business year ending this month.

At a time when many in the industry expect chip demand to begin recovering in the second half of this year, Renesas’ expected plant suspension in August is “a big surprise,” a stock market source said.

On the first section of the Tokyo Stock Exchange on Thursday, Renesas stock plunged to end at ¥584 with a maximum-allowable single-day loss of ¥100.

A chip industry analyst said that production and inventory management may not be going smoothly at Renesas.

Meanwhile, Renesas said in a statement Thursday that a flurry of media reports on possible temporary plant shutdowns by the company are not based on an announcement from the chipmaker.

But at the same time, Renesas admitted that the company is considering suspending production in accordance with the level of demand, with options including temporarily halting front-end factories for up to two months and back-end plants for a week several times, while stopping short of naming factories that would be subject to the possible moves.

The company said that it will decide any specific shutdown period by “taking demand trends and customers’ delivery status into consideration.”

“We’ll manage inventory levels appropriately as we see uncertainty over the course of demand in the second half this year,” a Renesas official said.

Other Japanese chipmakers are unlikely to follow suit.

“We’re scaling down production according to the level of demand and market conditions, but we’re not considering suspending our factories,” an official of a major memory chipmaker said.

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