Quake in Taiwan could shake up world’s semiconductor supply chains

Posted on : 2024-04-08 17:04 KST Modified on : 2024-04-08 17:18 KST
Some have pointed to the risk of overreliance on a single source for chips
Chipmaker TSMC’s logo. (Reuters/Yonhap)
Chipmaker TSMC’s logo. (Reuters/Yonhap)

As attention focuses on the potential impact of a recent 7.2-magnitude earthquake on Taiwan’s semiconductor industry, market research organizations and securities companies are presenting their assessments.

Taiwanese market research firms have stressed that Taiwan’s foundry and DRAM production were not impacted by the quake, while South Korean securities companies predicted that production setbacks could be crucial in highlighting the risk of overreliance on single supply chains.

The Taiwanese market research provider TrendForce noted Friday that “most wafer foundries were situated in areas that experienced a Level 4 intensity shake.”

“Owing to the high-spec construction standards of Taiwan's semiconductor factories, which feature world-class seismic mitigation measures capable of reducing seismic impacts by 1 to 2 levels, the facilities were largely able to resume operations after inspection shutdowns quickly,” it said.

It added, “Even though there were instances of wafer breakages or damages due to emergency shutdowns or earthquake damages, the capacity utilization rates of mature process factories — averaging between 50%–80% — meant that losses were quickly recovered after operations resumed, resulting in only minor impacts on capacity.”

The organization also said damage was limited in the case of TSMC foundry facilities, which had been a major focus of attention.

“Only Fab 12 suffered some water damage to equipment due to broken pipes, mainly affecting the not-yet-mass-produced 2nm process,” TrendForce said.

In the case of the advanced 3 nm to 5 nm semiconductor facilities, employees were not evacuated, and operation was restored to a rate of over 90% within six to eight hours of the earthquake, it explained.

As TMSC is the world’s largest semiconductor foundry business, suspended operations at its factories would potentially impact IT device production around the world.

In a statement issued Thursday evening, TSMC said it had surpassed 80% recovery for its facilities. At the same time, it said the process of restoring and calibrating automated production facilities on some lines was expected to take time.

South Korean securities companies predicted on Friday that fears about Taiwan’s foundry supply chains in the wake of the island’s biggest earthquake in a quarter century could lead global client companies to pursue diversification of their supply sources.

Kim Dong-won, an analyst with KB Securities, said, “With a sharp rise in AI semiconductor demand expected over the next three years, many are predicting that supply chain diversification for advanced foundry processes at the 5 nm level and smaller will rapidly shift their focus from TSMC to Samsung foundry production starting in 2024.”

Analysts also said there had been damage to Micron’s DRAM production line in Taiwan.

Kim predicted a rise in DRAM prices, suggesting that “client companies appear likely to increase their DRAM orders going forward due to concerns about a second-quarter DRAM supply shortage in the earthquake’s aftermath.”

By Lee Wan, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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