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Auto ETF Under Pressure on Renesas Chip-Plant Fire
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A recent fire at a factory of one of the world’s leading Japanese auto chip makers Renesas Electronics Corp. aggravated long-standing worries about the global crunch of automotive semiconductors.Shares of Renesas dropped as much as 5.5% after the key automotive semiconductor supplier said production at its fire-spoiled plant will take at least a month to resume. Carmakers will start to feel the supply crunch in about a month.
Toyota Motor Corp. (TM - Free Report) , Honda Motor Co. (HMC - Free Report) and Nissan Motor Co. have all seen shares sliding on the news. Toyota said on Mar 22 that it’s trying to figure out the fallout from that unexpected supply hit, per a Bloomberg article.
Renesas derives about 6.6% of its sales from Toyota, according to Bloomberg’s Supply Chain Analysis. The Japanese automaker Toyota also cautioned that cold weather-induced semiconductor shortage will compel it to halt operations in a factory in the Czech Republic for two weeks, as indicated on the Bloomberg article.
In 2019, Renesas was the third-largest maker of automotive silicon, per Bloomberg. Along with Toyota, carmakers including Volkswagen AG, Honda Motor and Nissan Motor Co. also made up the chipmaker’s clientele. In any case, the automotive industry has been striving hard to keep assembly lines functioning properly due to chip shortages.
Investors should note that the rising work-learn-and-shop-from-home trend amid the pandemic boosted demand for tech gadgets and caused chip shortages. Chief Executive Officer of Renesas Electronics said the incident may cost the company 17 billion yen ($156 million) in revenues, per the Bloomberg article.
Against this backdrop, below we highlight a few ETFs that could be under pressure on the Renesas Electronics’ fire issue.
ETFs Under Pressure
First Trust NASDAQ Global Auto Index Fund (CARZ - Free Report)
This ETF offers exposure to the global automotive industry. Honda takes about 8.7% of the fund while Toyota Motors comprises about 7.98% of the fund. Volkswagen takes 4.7% of the fund while Nissan Motor makes up about 3.94% of the basket. No wonder, the fund will be hit hard on the fire issue.
This ETF offers exposure to the large-cap Japanese stocks. Toyota takes about 4% of the fund while Daikin Industries, Ltd. (another sufferer of the chip crisis) takes about 1.26% of the fund. We expect the Japanese large-cap index to be under pressure in the near term.
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Auto ETF Under Pressure on Renesas Chip-Plant Fire
A recent fire at a factory of one of the world’s leading Japanese auto chip makers Renesas Electronics Corp. aggravated long-standing worries about the global crunch of automotive semiconductors.Shares of Renesas dropped as much as 5.5% after the key automotive semiconductor supplier said production at its fire-spoiled plant will take at least a month to resume. Carmakers will start to feel the supply crunch in about a month.
Toyota Motor Corp. (TM - Free Report) , Honda Motor Co. (HMC - Free Report) and Nissan Motor Co. have all seen shares sliding on the news. Toyota said on Mar 22 that it’s trying to figure out the fallout from that unexpected supply hit, per a Bloomberg article.
Renesas derives about 6.6% of its sales from Toyota, according to Bloomberg’s Supply Chain Analysis. The Japanese automaker Toyota also cautioned that cold weather-induced semiconductor shortage will compel it to halt operations in a factory in the Czech Republic for two weeks, as indicated on the Bloomberg article.
In 2019, Renesas was the third-largest maker of automotive silicon, per Bloomberg. Along with Toyota, carmakers including Volkswagen AG, Honda Motor and Nissan Motor Co. also made up the chipmaker’s clientele. In any case, the automotive industry has been striving hard to keep assembly lines functioning properly due to chip shortages.
Investors should note that the rising work-learn-and-shop-from-home trend amid the pandemic boosted demand for tech gadgets and caused chip shortages. Chief Executive Officer of Renesas Electronics said the incident may cost the company 17 billion yen ($156 million) in revenues, per the Bloomberg article.
Against this backdrop, below we highlight a few ETFs that could be under pressure on the Renesas Electronics’ fire issue.
ETFs Under Pressure
First Trust NASDAQ Global Auto Index Fund (CARZ - Free Report)
This ETF offers exposure to the global automotive industry. Honda takes about 8.7% of the fund while Toyota Motors comprises about 7.98% of the fund. Volkswagen takes 4.7% of the fund while Nissan Motor makes up about 3.94% of the basket. No wonder, the fund will be hit hard on the fire issue.
iShares MSCI Japan ETF (EWJ - Free Report)
This ETF offers exposure to the large-cap Japanese stocks. Toyota takes about 4% of the fund while Daikin Industries, Ltd. (another sufferer of the chip crisis) takes about 1.26% of the fund. We expect the Japanese large-cap index to be under pressure in the near term.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free>>