How did the Taiwan earthquake affect the tech industry?

tsmc i Taiwan påvirket af jordskælv
Translate from : Hvordan påvirkede jordskælvet i Taiwan tech industrien?
The strong earthquake in Taiwan has made many worried about whether there was damage that could affect the global tech industry. TSMC, which is located in Taiwan, is responsible for the production of no less than 90% of the world's most advanced chips.

Earlier this week, news broke that a powerful 7.4 magnitude earthquake struck Taiwan, the strongest earthquake in the region in the past 25 years. After concern for the human victims of this tragedy and how expensive and time-consuming it will be to rebuild, the next thought many had was whether the world's leading chip foundry, TSMC, had suffered serious damage and what the effect might be on its leading customers such as Apple, MediaTek, AMD and Qualcomm.

CNN reports that the quake killed nine people, while buildings collapsed and landslides were spotted. TSMC is located on the opposite side of the island from where the epicenter of the earthquake hit, which allowed them to avoid more serious damage. There were tremors in the company's offices and factories. Some of these production facilities shook so much that employees were evacuated. Later in the day on Wednesday, TSMC allowed workers to return to the assembly lines after announcing that everyone was safe.


While the news was good for TSMC and its customers, the world's largest foundry did report some damage to some of its chip production equipment. "A small number of tools were damaged at certain facilities, partially affecting their operations. However, there is no damage to our critical tools," TSMC said late Wednesday. More than 70% of TSMC's tools inside its factories had been restored within 10 hours of the earthquake. In newer plants, recovery levels were higher.

In an investor note on Wednesday, Barclays analysts pointed out that TSMC could take weeks to recover from a shutdown that lasted a few hours. "Some of the advanced chips need 24/7 trouble-free operation in vacuum mode for a few weeks," Barclays analysts said. With TSMC having to halt some of its operations, Barclays says that "some of the advanced chips that are in production could be destroyed." The total impact on the foundry could be a $60 million reduction in second-quarter earnings.

So this time, Apple, Qualcomm and others counting on TSMC can breathe a sigh of relief. But what happens the next time a major earthquake hits Taiwan? And even more worrying is the big communist elephant in the room, the Chinese Communist Party. CNN says that TSMC is responsible for the production of no less than 90% of the world's most advanced chips. That makes the foundry a tempting target for a country practically begging to be self-sufficient when it comes to semiconductors.


So there's an uneasy feeling bordering on fear when the conversation turns to TSMC's importance in the tech world. David Bader, professor and director of the Institute for Data Science at the New Jersey Institute of Technology, says: "I think it's an existential threat. The whole world is now working on semiconductor devices that power everything we do, whether we drive in our cars, whether we're talking on our cell phones, even our military defense or weapons systems, airlines, everything uses chips. If production were to stop ... it would be devastating."

Angelo Zino, CFRA research analyst, said Wednesday: "We believe the earthquake should remind investors of the risks associated with having so much foundry exposure from one region." The tech industry must find a solution.

One of these solutions is being worked on in the USA, where the Biden administration has taken major steps to expand chip production in the USA.

Our Partners