Japanese Chipmaker Renesas Stops Work at Beijing Plant

Japan’s Renesas Electronics Corp has suspended production at its Beijing chip plant after workers caught Covid-19.

The chipmaker – the world’s leading maker of automobile chips – said on Monday that work at the factory was halted on Friday and it would be closed for more days this week.

Renesas said the plant mostly produces semiconductors used in industrial machinery and home appliances.

This appears to be one of the first suspensions by a major foreign manufacturer since China dropped its tough Covid restrictions less than two weeks ago.

A company spokesperson said the group would be able to make up for the lost output with existing stock and did not expect much of an impact from the stoppage.

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Still, the suspension serves as a high-profile sign of the potential knock-on economic effect for foreign manufacturers in China from the worsening Covid crisis.

The recent surge infections has hit major urban centres in China and is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai.

China’s broad relaxation of strict containment measures earlier this month triggered the still-growing wave of infections.

Health experts say that China may now pay a price for shielding a population that lacks natural immunity and has low vaccination rates among the elderly.

Renesas, which makes around a third of all the microcontroller chips used by the world’s carmakers, is one of many big Japanese manufacturers to have operations in China. It also has a plant in the eastern city of Suzhou.

Any disruption in China could also be troublesome for Japan’s automakers, given their large manufacturing presence there. Neither Toyota Motor nor Nissan Motor responded to a request for comment about their operations.