Chip shortage affecting car companies around the globe

Computers have infiltrated nearly every industry - even if consumers aren't aware of their presence. New model cars, for example, rely on computers to do everything from open windows to power GPS systems. According to a recently published report, automakers around the globe are reeling from a shortage of chips that control those computer systems.

The New York Times reports that a majority of the critical chips are manufactured in a plant in Japan that was walloped March 11 by the 9.0-magnitude earthquake and subsequent tsunami. Without the electronic devices, many carmakers have had to either shutter or temporarily reduce manufacturing capacity.

In Japan, the carmaking industry is reeling from the destruction, and its automobile production has sunk by over 50 percent in the wake of the natural disasters. The supply chain disruptions emanating from Japan have hurt businesses, resulting in lower revenue at companies like Coca-Cola, but the auto industry has been particularly affected.

One Japanese manufacturing facility is responsible for a majority of the chips used in cars, but the factory was particularly hard-hit. Even though Renesas Electronics, which owns the facility, has poured manpower and money into getting the manufacturing plant back online, company officials acknowledged that the damage is so extensive the workers have only made a dent in necessary repairs. In fact, the company said it would only gradually come back to full capacity as it grapples with the challenge of repairing cracked walls, collapsed ceilings and damaged equipment.

Renesas' factory 70 miles northeast of Tokyo supplies about 40 percent of the world's supply of the critical computer chips, known as automobile microcontrollers. The automobile industry has evolved so that the chips are normally customized for each car model, and as a result the production halt has been especially pronounced, analysts assert, as carmakers can't simply turn to alternate suppliers.

Tetsuya Tsurumaru, the senior vice president in charge of manufacturing for Renesas, said on Wednesday that the company played an important role in the supply chain of automobile companies throughout the globe - a role it takes seriously. "We have an important role and responsibility," he affirmed. "We are aware of this and are doing our best to restore the supply chain as soon as soon as possible."

The company plans to restart production on June 15 - a month earlier than estimated - but its manufacturing output is projected to be only about 10 percent of its capacity. The company has thus far refused to forecast when production would resume at normal levels as repairs are ongoing.

In the interim, the company has shifted its production to another factory in Japan that was undamaged by the tsunami and earthquake, and has also contracted some of the production to GlobalFoundries, a contract manufacturer based in Singapore that has manufactured the critical chips in the past.

Nonetheless, shortages are projected to persist for the short- and medium-term, if not longer. "Let's show Renesas's inner strength and unite our hearts to restart in June," a banner on the company's factory reads. "Customers from all over the world are waiting."

Illustrating the strategic importance of the manufacturing facility, automakers, auto parts companies and other customers have sent as many as 2,500 workers to the plant to assist with repairs, the news publication reports.