Taiwan Draught Putting More Pressure on Chip Supply Chains

Issue 67

Taiwan is currently experiencing the worst drought the island has seen in the past half-century, and this has posed a serious issue for the recent chip shortage as Taiwan makes up nearly two-thirds of the world's semiconductor manufacturing capacity with Taiwan producing 65% of the world's semiconductors.

Taiwan requires a significant amount of water to produce chips and as the drought limits water supply, companies are trying to find alternate methods to keep supply consistent.  Taiwan’s government has begun rationing water for its businesses and residents and fear that the issue will worsen unless rainfall is soon to come.

This is not the first time that weather has interfered with semiconductor production.  Earlier this year Samsung was forced to close two of its plants in Texas as well as an earthquake in Japan forcing Renesas Electronics to close one of its plants.

Chip manufacturing plants in Taiwan are planning on importing massive amounts of water into the country in an attempt to increase semiconductor production until the drought has passed.  TSMC believes that through the importation of water it is likely that they will see no change in operations or production.  With this being said TSMC still uses massive amounts of water as 156,000 metric tons of water a day were used by the company across Taiwan’s three science industrial parks in 2019.

The drought has caused these manufacturers to rethink their operations as many of them are now devising plans to reduce water consumption throughout their plants and hope to reduce water consumption by 30% by the year of 2030.  However, if the water shortage is not mended within Taiwan the world could face an even greater chip shortage than is already present.

Source: New York Times