Steel Markets

Japan Fire Tightens Chip Squeeze, Shortages Spread to Other Materials

Written by Michael Cowden

North American auto assembly plants continue to see production hobbled by a global microchip shortage.

The chip supply squeeze could become more intense because of a fire on Friday at Japanese microchip supplier Renesas Electronics.

And the trouble doesn’t stop there. Parts requiring petrochemicals are in some instances in short supply because severe weather in February hurt output at U.S. refineries, as have the ongoing impacts of the COVID-19 pandemic. 

The Fire

The blaze broke out on Friday, March 19, at 2:47 a.m. local time at a Renesas plant in Naka, in the Japanese prefecture of Ibaraki. It was not extinguised until 8:12 a.m., according to a statement from the semiconductor maker.

“We aim to resume production within one month,” Renesas said.

In normal times, Renesas could source two-thirds of its production elsewhere, either from alternative production in-house or from third-party semiconductor producers. The problem: “Due to the recent increase in demand for semiconductors, the situation does not allow for all products to be immediately produced alternative,” the company said.

The Japan Times reported that the fire could result “in a substantial cut in its supply of chips to its customers, including automakers.” The publication also quoted Renesas President and CEO Hidetoshi Shibata as saying that the blaze could have “a very large impact.”

Below is a partial list of automakers with operations in North America that have been impacted by the chip shortage–either in general or stemming from the fire at Renesas or other supply chain snarls. 


Before the fire at Renesas, the microchip situation had only been disrupting production of Toyota’s Tundra pickup, a spokesman for the Japanese automaker told Steel Market Update on Monday, March 22.

The Japanese automaker makes the Tundra at an assembly plant in San Antonio, Texas.

But the impact of the chip shortage might spread because the fire is expected to hamper Renesas output for “at least a month,” the spokesman said.

“As of now, we are trying to quickly determine how that will impact our operations and what countermeasures we can take,” he said. “So, we expect more of an impact, but it’s too soon to concretely say to what extent.”

Toyota said it had in addition been impacted by petrochemical product shortages.

“Due to COVID and recent severe weather-related events, Toyota has been informed that a supply shortage will continue to affect production at our Kentucky, West Virginia, Mississippi and Mexico plants,” the spokesman said.

“Our manufacturing and supply chain teams are working diligently to resume normal operations as quickly as possible by evaluating the supply constraint and developing countermeasures to minimize further impact to production,” he said.

Ford, too, has said that severe weather in the central U.S. in February has resulted in a parts shortage broader than just those components containing microchips. 


Honda, another major Japanese automaker with significant operations in North America, thinks it’s too early to speculate whether the Renesas fire will impact production, a company spokeswoman said.

But Honda has already been hit by a number of supply chain issues, including COVID-19, port congestion, the microchip shortage and the consequences of severe winter weather, she said.

“Our purchasing and production teams are working to limit the impact of this situation and are adjusting production as necessary in order to carefully manage the available supply of parts,” the spokeswoman said.

Most of Honda’s North American auto assembly plants had already suspended production the week of March 22. Some plants will halt output the week of March 29 as well, she said.

“Since this is a fluid situation that requires flexibility, the time and length of the production adjustments could change,” the spokeswoman said. 


Other automakers, meanwhile, have decided to continue to build vehicles but to hold them onsite until they have enough parts to finish assembly.

Stellantis, formerly known as FCA (and Chrysler before that), is “building and holding” the Ram 1500 Classic pickup truck at its Warren, Mich., truck assembly plant and at its truck assembly plant in Saltillo, Mexico, because of “an unprecedented global microchip shortage,” a company spokeswoman said.

“When the component that requires the chip becomes available, we will complete the build, then perform extensive quality verifications before shipping finished trucks to dealers,” she said.

Stellantis expects to release vehicles built in this manner in “a number of weeks,” the spokeswoman said.

She could not immediately confirm whether the company had been directly impacted by the fire at Renesas. 

General Motors

General Motors, too, has taken a build-and-hold approach when it comes to some vehicles.

“In some cases, we intend to build vehicles without certain modules and will complete them as soon as possible. This will help us quickly meet strong customer demand as more semiconductors become available,” a GM spokesman said.

But he stressed that GM has not taken any downtime at any of its full-size truck plants.

Indeed, the company continues to churn out certain full-size trucks, among its most profitable and in-demand vehicles, without certain semiconductor-containing parts


Nissan said it too continues to be impacted by the chip shortage.

“We have had to make some additional adjustments to our North American production schedules due to semiconductor-related parts supply,” a Nissan spokeswoman said.

“We continue to work closely with our supplier partners to assess the impact of supply chain issues and minimize disruption for vehicle deliveries to our dealers and customers,” she said.

The result on operations: Nissan’s plant in Smyrna, Tenn., cancelled production on a line that makes the Murano SUV on Friday, March 19, and Monday, March 22. Production is slated to resume on Tuesday, March 23, the spokeswoman said.

The Smyrna plants also cancelled weekend production on another line that makes the Rogue SUV, the Maxima mid-size car, and the LEAF compact car. That production had been expected to make up for output lost during a February ice storm, she said.

A similar situation played out at Nissan’s plant in Canton, Miss., where production of the Altima mid-sized car was cancelled on Friday, part of Saturday, Monday and is expected to resume on Tuesday.

In Mexico, meanwhile, Nissan has halted production at Plant 1 of its operations in Aguascalientes through Tuesday, March 23. The plant–which makes the Versa subcompact, the Kicks compact SUV, and the March mini–is expected to resume on Wednesday, March 24, the spokesman said.

Still, Nissan is unaware of any direct impact from the Renesas fire, she added.

By Michael Cowden,

Michael Cowden

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