LAS VEGAS -- At the International CES this month, chipmakers such as Renesas, Nvidia and Freescale were eager to brag about their readiness to supply the silicon brains for infotainment and driverless cars.
But when I chatted with Ali Sebt -- chief of Renesas' U.S. operations -- I was preoccupied with thoughts of floods, earthquakes and fires. Four years ago, Japan's auto industry was brought to its knees after an earthquake damaged Renesas' chip plant in Naka.
Could it happen again?
This is no idle question. With a 42 percent share of the global market for automotive microcontrollers, Renesas can single-handedly bring global production to a halt if it is crippled by a natural disaster.
But Sebt says Renesas is prepared for the next Big One.
"We have reinforced all of our factories so that they can withstand an earthquake," Sebt said. With other preventive measures in place, "we can function for some months with a buffer supply" of chips.
Renesas has taken other steps to prevent a shutdown. Sebt said the company:
- Warehouses four- to 12-week supplies of chips, depending upon the product line.
- Has retrofitted its factories to make them earthquake-resistant.
- Is dual-sourcing some products with backup production in a second plant.
- Has made contingency plans to transfer chipmaking equipment to other plants.
Some of the steps taken to make its plants disaster-proof were common-sense measures, Sebt said.
"A lot of damage was caused when things simply fell over," Sebt said. "There was a lot of fragile crystal and glass, and the plant fittings were rigid, so they just broke."
Now, the production facilities have flexible fittings, hoses and cables that are less prone to rupture. Key chipmaking equipment is stored in electronically stabilized, earthquake-proof rooms. The company also has devised a recovery plan to reopen damaged factories within four weeks, rather than the eight weeks it took to repair Naka.
Renesas also has recovered from the financial crisis that engulfed the company after the earthquake. In 2012, the Japanese government and a consortium of 10 companies -- a group that included Honda, Nissan, Toyota, Panasonic and Denso -- bought a two-thirds share of Renesas for $2.6 billion.
Now Renesas is profitable again, with a net income of $390 million for the nine months ending Dec. 31, 2014.
The company also has defended its status as the auto industry's biggest chipmaker, ahead of Infineon Technologies AG of Germany. Renesas is getting its share of chip contracts for infotainment and collision avoidance.
In November, for example, Visteon confirmed that it would use a Renesas-made chip to control an instrument cluster, head-up display and console screen for an unnamed European automaker in 2018.
Says Sebt: "We are stable, we are back to profitability, and we have shed our unprofitable product lines."