Chip maker Renesas Electronics said on Tuesday (30 March) it could be over three months before full production resumes in its N3 Building at the Naka Factory (Hitachinaka, Ibaraki Prefecture), conditional on procurement of replacement equipment.

In a press conference, the company said investigations by the manufacturer of the equipment which was the cause of the fire and local fire department had yet to determine why the equipment caught fire and the cause was still under investigation.

"We are receiving tremendous assistance from customers, equipment manufacturers, partner companies and construction companies, and they are working with Renesas employees to recover the clean room as early as possible," the supplier said. The beam reinforcement within the clean room was completed on 29 March and the procurement of materials used in clean rooms such as filters as well as the clearing of soot etc is progressing mostly on track. The clean room is expected to be recovered by around mid-April."

Around three-quarters of the work-in-process products being manufactured in the N3 Building were not damaged and can be turned into finished products.

In addition to the initially announced 11 units of burned equipment, an additional 12 units were affected by the fire. Of those, replacement of 11 units will be procured within April.

"On the other hand, some equipment may not be procured until after June. We are in discussions with equipment manufacturers to procure the equipment at an earlier date where possible," Renesas said.

"We aim to complete recovery of the clean room of the N3 Building by around mid-April and resume production in one month as initially announced. Although this will depend on the product, following the lead time of a typical product, if we are able to procure all necessary manufacturing equipment by the end of April, we expect to begin product shipment to our customers of the remaining work-in-processes of the first floor of the N3 Building in approximately 60 days after the fire.

"In approximately 90 days after the fire, we expect to begin product shipment to our customers of the remaining work-in-process of the second floor of the N3 Building, leading to the expectation of 100% recovery of product shipment of products manufactured in the N3 Building to customers approximately 100 days after the fire.

"However, this is with the premise that all necessary manufacturing equipment can be procured by the end of April, and if there are delays in the procurement, the time it takes to recover to 100% of the product shipment volume before the fire will be also delayed."

Alternative production is also being looked at.

"Approximately two-thirds of the products manufactured within the N3 Building can technologically be alternatively produced in-house or outsourced. If 1.5 months' worth of the N3 Building's manufacturing capacity is alternatively produced, we expect approximately 100% of products to be outsourced and 82% of products can be produced in alternative in-house factories. If two months' worth of the N3 Building's manufacturing capacity is alternatively produced, we expect approximately over 90% of products to be outsourced and 73% of products can be produced in alternative in-house factories."

The supplier has revised down the financial hit from JPY17bn per month to approximately JPY13bn as the initial calculation included other unaffected production lines.

"Including the impact of the fire and the finished product inventory worth approximately JPY2bn in mind, if the N3 production capability took 1.5 months to recover to 100%, the financial impact is expected to be approximately JPY17.5bn, and if it took two months to recover, the financial impact is expected to be approximately JPY24bn.

"In addition, marginal profit reduction due to decrease in revenue is expected to be approximately 60% in amount against the revenue impact. Inventory disposal, fixed assets impairment and repairment costs are expected to arise as well. We also expect procurement costs of replacing manufacturing equipment impacted by the fire as capital investments, but we are currently confirming the details and will make further announcements once more information is available," Renesas said.