Renesas plans upgrade for Japan chip production to handle major earthquakes

The Japan firm, which makes chips for the Wii and Xbox 360, will spend hundreds of millions to quakeproof its lines.

Renesas Electronics will upgrade its Japanese factories so that they can be up and running within a month after a major quake like the one that struck Japan in March.

The company is the world's largest maker of microcontrollers, and its parts are in well-known consumer products such as the Nintendo Wii and Microsoft's Xbox 360, as well as popular automobiles like Toyota's Lexus. A key factory that was damaged in the last earthquake took six months to return to its previous capacity, and the lack of semiconductors out of Japan was a major reason for the global backlog in production.

Renesas will invest "in the lower range of several tens of billions of yen" (¥10 billion = $US130 million) on the upgrades, spokeswoman Shino Inokuma said. The work will be done in two stages and completed by September 2013. Renesas will also keep a one-month supply of some components on hand to cover any stoppage time.

When the magnitude-9.0 earthquake struck on March 11, it knocked out a major plant in Ibaraka Prefecture, about 250 kilometers from the epicenter. The inland site was unaffected by the tsunamis that ravaged much of Japan's eastern coast, but the shaking was strong enough to move heavy machinery that had been bolted down and rip open holes in the clean rooms where its chips are manufactured.

The site makes key microcontrollers used in cars and consumer electronics, so the downtime directly contributed to global production disruptions, and its revenues suffered by about ¥50 billion during the six-month period through September.

Semiconductor production is an automated process that must be accurate to the nanometer, so lines are immediately halted any time machinery is misaligned. The clean rooms where manufacturing occurs are kept free of even microscopic dust and particles and so are completely refiltered if any contamination occurs.

The Japanese government predicts that Tokyo and other parts of central Japan are due for major earthquakes, based on historical models.

The company was formed in 2003 from the semiconductor divisions of Hitachi and Mitsubishi Electric, and merged with NEC Electronics last year.

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