According to Nikkei, Japanese chip manufacturer Renesas Electronics announced on Wednesday its plan to increase its supply capacity for key components of automobiles and electronic products by more than 50% by 2023, as some industry observers predict that global chip shortages may continue. To next year and beyond.
In the updated production strategy started this year, Renesas Electronics plans to increase the production capacity of its high-end microcontroller units by 50%, reaching a capacity equivalent to 40,000 200mm wafers per month, mainly through the acquisition of more in chip foundries. Outsource production line.
Microcontrollers are widely used in automobiles, making Renesas a key link in the global supply chain of automakers. The company's importance as a supplier was highlighted earlier this year due to the outage following a fire in a chip factory in northeastern Tokyo.
As it expands, chip makers have difficulty keeping up with high demand, forcing automakers to idle assembly lines and disrupting production in other industries. Since the end of June, Renesas Electronics’ outstanding car orders have surged by about 30%.
"We have been increasing supply, but as manufacturers make up for lost production time, demand is also strong," said Takeshi Kataoka, senior vice president and general manager of the automotive solutions business unit of Renesas Electronics.
"We failed to close the gap," he added.The company will also increase the production capacity of low-end microcontrollers by approximately 70% to more than 30,000 wafers per month, mainly by expanding internal facilities.
Renesas Electronics stated that it will invest more than 80 billion yen (US$715 million) in capital investment in 2021. Some of them will be used to repair the Naka factory, which was destroyed by the fire in March, and work to make its facilities more resilient. It is planned to increase capital expenditure by 60 billion yen in 2022.
Both of these figures are a significant increase over the approximately 20 billion yen allocated to capital investment by Renesas Electronics in recent years.
Strong demand has brought good news to Renesas' earnings. The company's gross profit margin has improved mainly in its industrial, infrastructure and connectivity-related businesses. Combined with the success of its newly acquired British subsidiary Dialog Semiconductor, Renesas Electronics’ long-term goal now is to achieve an operating profit margin of 25% to 30%, higher than the previous target of more than 20%.
Renesas Electronics was rescued from the cash crunch by government-backed funds and customer alliances including Toyota Motor in 2013, and also announced that it plans to start giving back to shareholders as early as next year because of its increasing profitability. President and CEO Hidetoshi Shibata stated that he hopes to start rewarding shareholders "within a year or two, preferably in 2022."
NEC Electronics, the predecessor of Renesas Electronics, paid a dividend last time in March 2005. The company intends to start with stock buybacks and start paying dividends when things get better.
Car chip supply is tight and there is no end in sight
Hideri Shibata, chief executive of Japan's Renesas, a major automotive chip manufacturer, said recently that the company will continue to accumulate orders next year and is not sure whether it can meet customer needs. Looking forward to the whole year of next year, it is still not clear that the imbalance between supply and demand can be eased.
Shibata reported on the company’s latest operating status via a video conference today. He said: “Next year’s orders have now accumulated. I don’t think we will be able to fully meet customer needs until next year.” He understands that investors want to know when the chip shortage is a problem. It can end, but there is no end in sight yet.
Automotive chips are very important to the production of automakers such as Toyota and Nissan. Tesla CEO Musk has even described Renesas’ supply situation as a “top priority” issue when a series of supply chains are subject to extreme restrictions.
A fire at a Renesas plant in March exacerbated the shortage of automotive chips, which in turn affected the stock prices of Toyota and Nissan. Earlier in March, Shibata stated that the chip shortage will continue into the second half of this year. It now appears that the supply will still be in short supply for the whole year of next year, and it may continue until after 2022.
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