Japan’s Renesas moves more automotive chip production in-house

TOKYO — Japan’s Renesas Electronics is fabricating more of its automotive semiconductors in-house as contract manufacturers are swamped with orders, Nikkei learned Thursday.

The switch primarily affects 40-nanometer microcontrollers, as Renesas appears to have lifted the ratio of in-house fabrication for that item. The company did not disclose the scale of the shift.

Much of the production had been outsourced to companies such as Taiwan Semiconductor Manufacturing Co. But those businesses have been unable to process the influx of orders they have received. Renesas will handle more of the work itself to reduce the risk of delayed deliveries to customers.

The semiconductors are being made temporarily on a mass production line at Renesas’ main Naka factory in the Japanese city of Hitachinaka. The line, which makes use of 12-inch silicon wafers, had been partially idled.

Renesas will spend more on electricity and materials procurement compared with using a contract manufacturer, but the company has prioritized delivery times.

In the early 2010s, Renesas began increasing outsourcing to such foundries as TSMC. Most recently, 30% of the Japanese company’s semiconductors had been manufactured externally.

This approach was taken due to the massive capital spending involved in constructing equipment for making cutting-edge semiconductors. Renesas also sought to retain extra in-house capacity to respond to run-ups in demand of multiple low-volume products.

Other chipmakers have adopted a similar strategy of handling design internally and outsourcing production. But demand for semiconductors in the automotive and tech industries soared beginning last fall, and now outstrips supplies from foundries. Chipmakers are scrambling to secure contract production in this environment.

“Some companies are paying steep fees to gain access to equipment at foundries,” said a source at a major semiconductor company.

Though Renesas moved more production in-house, it continues to outsource products that are 28 nm and below due to the complexity of manufacturing such semiconductors. TSMC and other large contractors are looking at lifting service fees by 15%, which further exposes Renesas to the risks of shrinking internal production.

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