Earthquake in Taiwan compels TSMC to evacuate its production; chips shortages may occur

Following the most significant earthquake to hit Taiwan in 25 years, United Microelectronics Corp. (UMC) and Taiwan Semiconductor Manufacturing Co. (TSMC) both had to evacuate large portions of their factories, raising concerns about chip production at the top producer of advanced chips worldwide. The main contract chipmaker for tech behemoths like Apple and NVIDIA, TSMC, was compelled to move its employees from particular regions. It has been anticipated that mobile phones, PCs and practically all other electronic devices are likely to get more expensive for the next few months because of this.

Taiwanese firms, including TSMC and ASE Technology Holding Co., dominate the global semiconductor market, supplying chips for various devices from iPhones to automobiles. It is estimated that about 80-90% of all silicon chips that power smartphones and AI-running supercomputers, come out of Taiwan, either in the form of finished SoCs, or silicon wafers.

As Taiwan is located near a major fault line, where two tectonic plates meet, makes it prone to frequent and sometimes extremely violent earthquakes. So, Taiwanese factories are susceptible to minor seismic activity regularly, a single major tremor is capable of ruining entire batches of precision-made semiconductors.

TSMC stated in a press release, “TSMC’s safety systems are functioning normally. As per company protocol, certain fabs were evacuated to ensure personnel safety. We are currently in the process of assessing the extent of the impact.”

Relying too much on Taiwan for semiconductor manufacturing has raised major concerns for industry leaders and government officials for years now. In response to these concerns, government officials all over the world have been urging Taiwanese companies, including TSMC, to diversify their manufacturing locations geographically, mindful of the potential threats to Taiwan’s stability.