A magnitude 7.1 earthquake that hit the Kumamoto region on July 28 cracked walls, leaked water, and cut the pure-water supply at Renesas Electronics' Kawashiri factory, forcing a production halt. The chipmaker said it will begin a phased restart on August 5, aiming to reach full wafer-input capacity in roughly 29 days.
The damage and the restart
The quake left the Kawashiri plant with wall cracks and water leakage, and it temporarily knocked out the pure-water supply that chip fabs rely on to keep production lines running. Renesas didn't say how many wafers were affected this time, but the company has scheduled a phased restart starting August 5. Full wafer-input capacity should return within about three weeks, or approximately 29 days.
The nearby Nishiki factory, which also sits in the quake zone, was back to pre-quake capacity on July 31, just three days after the tremor. That faster recovery suggests the damage at Kawashiri was more serious, though Renesas hasn't detailed the extent of the hit to output.
A familiar setback
This isn't the first time Kawashiri has been shaken. In 2016, a similar earthquake at the same plant knocked out 35% of its wafers, cut sales by ¥14 billion, and reduced operating income by ¥8 billion. Back then, it took 35 days to restore full capacity. Renesas spent about ¥10 billion after the 2011 disaster to raise the seismic grade of its plants, including Kawashiri, but the 2026 quake still managed to halt production.
The company is a dominant supplier of automotive microcontrollers, so any prolonged disruption can ripple through carmakers that depend on those chips. The 29-day recovery timeline is shorter than the 2016 outage, but it's still a meaningful gap in supply.
Market reaction
Renesas stock took a hit in the days after the quake, though the initial drop wasn't entirely quake-related. Shares fell 10.45% on July 28, before the tremor, as part of a wider Asian chip selloff. They dropped another 8.43% on July 29, then jumped 13.45% on August 3 after the company reported strong second-quarter results.
By August 10, Renesas closed at ¥3,825, just 1.1% below its pre-quake level. The Q2 numbers were solid: non-GAAP revenue grew 24.9% and operating profit rose 44.4% year-over-year. The company also issued a nine-month forecast guiding to further growth, but it's unclear whether that outlook includes any earthquake impact.
Analysts tracked by TipRanks still see upside. They maintain a Strong Buy consensus with an average 12-month price target of ¥5,720, about 49% above the August 10 close.
The legal overhang
On August 11, Navitas Semiconductor filed a patent-infringement lawsuit against Renesas, adding a legal overhang to the operational recovery. The suit's specifics weren't disclosed in the initial filing, but it gives investors another reason to watch the company closely.
For now, the focus is on the Kawashiri restart. Renesas hasn't said whether its nine-month guidance accounts for the quake's production loss, and the Navitas case could complicate things further. The next few weeks will show whether the factory gets back to full capacity on schedule.
