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Earthquake in Taiwan necessitates TSMC to evacuate their plant, a potential disruption in chip production and price surge is expected
Continuous dependence on Taiwan for semiconductor production has been a significant worry for industry executives and government authorities for quite some time. Therefore, numerous government representatives have been advocating for chip producers to broaden and vary their manufacturing processes beyond Taiwan.
The cost of mobile phones, computers, and almost all other electronic devices are expected to rise in the coming months due to the severe 7.4 magnitude earthquake that struck Taiwan today.
Following the biggest earthquake Taiwan has experienced in the last 25 years, Taiwan Semiconductor Manufacturing Co. (TSMC) and its rival, United Microelectronics Corp. (UMC), have cleared out substantial areas of their manufacturing plants. This has led to questions about the future of chip production at the top global producer of advanced chips.
TSMC, the key supplier of chips for tech heavyweights such as Apple and NVIDIA, had to move their employees from certain regions. The chip manufacturer announced that they are assessing the consequences of the 7.4-magnitude earthquake that occurred on the eastern coast of the island. Similarly, UMC halted work at some factories and cleared out facilities in its Hsinchu and Tainan centers.
Companies from Taiwan, such as TSMC and ASE Technology Holding Co., lead the worldwide semiconductor industry, providing chips for a range of devices like iPhones and cars. It's believed that Taiwan produces around 80-90% of all silicon chips used in smartphones and AI-operated supercomputers, whether in the shape of completed SoCs or silicon wafers.
Taiwan is situated close to a significant fault line, where two tectonic plates converge. As a result, it often experiences frequent and occasionally highly intense earthquakes.
Since Taiwan frequently experiences earthquakes, and its factories often face small-scale seismic disturbances, a single significant quake has the potential to destroy entire lots of meticulously crafted semiconductors.
"TSMC's safety mechanisms are working as they should. In line with the company's standard procedures, some facilities were cleared to guarantee the safety of the staff," the company announced in a press statement. "We are now evaluating the level of damage caused."
For several years, industry chiefs and government authorities have been significantly worried about the over-dependence on Taiwan for the production of semiconductors.
The global semiconductor scarcity was aggravated by the COVID-19 pandemic, drawing attention to the inherent weaknesses in the worldwide supply chains for silicon chips. This crisis not only led to a significant deficiency of chips in various industries globally, but the available chips were also being traded at triple or even quadruple their standard price.
Scalpers were purchasing NVIDIA's GPUs, which are typically utilized in gaming and video editing computers, cryptocurrency mining, and newly in AI applications, in order to make a swift profit. These components were then being resold for a price increase ranging from 50 to 250 per cent.
Government authorities globally have voiced their concerns, encouraging Taiwanese firms such as TSMC to spread their production sites across various locations, taking into account the possible risks to Taiwan's stability. Taiwan's vulnerability to natural disasters like earthquakes and tsunamis, as well as its ongoing challenges with an unpredictable and troublesome China, are reasons for such advisories.
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