March 7, 2019 / 7:05 AM / 3 months ago

Japan's Renesas to partially halt chip production for two months on China slowdown

Renesas Electronics Corp's logo is seen on its product at the company's conference in Tokyo, Japan, April 11, 2017. REUTERS/Toru Hanai/Files

TOKYO (Reuters) - Automotive chipmaker Renesas Electronics Corp plans to halt production at six plants in Japan for up to two months this year as it braces for a further slowdown in Chinese demand, the company said on Thursday.

The company is considering halting front-end production at the plants for a month around May and again for a month around August to avoid excessive chip inventories amid uncertainties stemming from Sino-U.S. trade frictions.

Back-end production at three other plants in Japan, as well as four plants in China and Malaysia, may be also temporarily suspended on a weekly basis several times, the company said.

Renesas expects chip demand for autos, machine tools and air conditioners to slip further this year, a company spokesman said.

The suspension plans, first reported by media late Wednesday, spooked investors and drove down Renesas shares by their daily allowable limit of 100 yen, or 14.6 percent, to 584 yen on the Tokyo stock exchange on Thursday.

On Wednesday, Hyundai Motor Co said it was considering plans to suspend production at its oldest plant in China, as the South Korean carmaker reels from tumbling sales and massive overcapacity in its biggest market.

China’s car sales contracted for the first time since the 1990s last year, hit by a weakening economy and the fallout of trade frictions with the United States.

Reporting by Makiko Yamazaki; Editing by David Dolan and Nick Macfie

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