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The recent 7.4-magnitude earthquake in Taiwan has shaken the foundations of the chip-making industry. Major chipmakers like TSMC and UMC have announced that they will halt production and assess the damages.
This one is the strongest earthquake to hit Taiwan in 25 years, raising concerns about potential disruptions in the global technology supply chain, particularly in the semiconductor industry.
After the earthquake, a Tsunami warning was issued for coastal regions of Japan and the Philippines. However, the Philippines later withdrew the warning.
TSMC, a contract chipmaker for companies like Apple and Nvidia, evacuated personnel from affected areas and is currently assessing the impact on its operations.
“Preventative measures were initiated according to procedure, and some fabs were evacuated. All personnel are safe, and those evacuated are beginning to return to their workplaces. The company is currently confirming the details of the impact,” TSMC said.
Similarly, United Microelectronics Corp., another key player in the semiconductor sector, also took precautionary measures by halting machinery and evacuating facilities machinery and evacuating facilities in Hsinchu and Tainan, reported Bloomberg.
Although Taiwan is a hub of semiconductor industry, its location in the seismic zone means any slight seismic activity can disrupt operations and damage precision-made components. Furthermore, the island’s dispute with China has led many experts to question the future of the country’s semiconductor industry.
Analysts have highlighted the risks associated with halting production, particularly for high-end chips that require continuous operation in controlled environments for extended periods.
Following the earthquake, shares of TSMC experienced a 1.3% decline, reflecting investor concerns about potential production disruption.
While TSMC has reported that the staff are gradually returning to evacuated sites, the full extent of the impact on production remains uncertain.
Considering these natural and geopolitical tensions, chip makers are looking to diversify their production geographically. TSMC is expanding its operations in Japan and the United States. However, these initiatives will take time to reach full capacity, and until then, the companies have to rely on Taiwan’s chip manufacturing capabilities.
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