Japan’s Renesas Electronics Corp has suspended work at its Beijing chip plant because of COVID-19 infections and will keep it closed for several days, it said on Monday, one of the first suspensions by a major foreign manufacturer.

Renesas, the world’s leading maker of automobile chips, said it halted the factory on Friday. The plant mostly produces semiconductors used in industrial machinery and home appliances.

The chipmaker will be able to make up for the lost output with existing stock and does not expect much of an impact from the stoppage, a spokesperson said.

Still, the suspension serves as a high-profile sign of the potential knock-on economic effect for foreign manufacturers in China from the worsening COVID crisis.

The recent surge in COVID cases in China has hit major urban centres and is sweeping through trading floors in Beijing and spreading fast in the financial hub of Shanghai.

China’s broad relaxation of strict COVID containment measures earlier this month triggered the still-growing wave of infections. Health experts say that China may now pay a price for shielding a population that lacks natural immunity and has low vaccination rates among the elderly.

Renesas, which makes around a third of all the microcontroller chips used by the world’s carmakers, is one of many big Japanese manufacturers to have operations in China. It also has a plant in the eastern city of Suzhou.

Any disruption in China could also be troublesome for Japan’s automakers, given their large manufacturing presence there. Neither Toyota Motor Co Ltd nor Nissan Motor Co Ltd immediately responded to a request for comment about their operations. 

Reuters