Counterpoint Research predicts that the recent earthquake in Taiwan, the strongest in the last 25 years, will likely have a minor to moderate impact on chip production capacity. As Taiwan is a key hub for semiconductor manufacturing, with major fabs located across the country, any disruptions in production could affect global supply chains.
The extent of the impact on chip production capacity will depend on the final assessment of the damage caused by the earthquake. Counterpoint Research suggests that while there may be delays of up to a week, the overall impact is expected to be minimal, especially considering the current slow season.
Micron Technology, a US-based company with factories in Taiwan, is evaluating the impact on its operations following the earthquake. While all team members have been reported safe, the company is assessing the situation and will communicate any changes to delivery commitments to its customers after completing the evaluation.
Taiwan Semiconductor Manufacturing Company (TSMC) has also been affected by the earthquake, with reports of staff being relocated from certain factories. However, production is expected to resume shortly, with partial recovery anticipated at TSMC’s facilities. The TSMC N3 fab in Tainan, which was undergoing volume production using its 3 nm semiconductor node, has experienced disruptions, particularly in EUV operations.
Counterpoint Research suggests that production delays ranging from 6 to 10 hours are likely due to the severity of the damage and the recovery timeline. This disruption not only impacts Taiwan’s semiconductor ecosystem, including fabs and ATP players, but also has implications for the global electronics industry.
According to Danish Faruqui, CEO of Fab Economics, the direct impact on Taiwan’s semiconductor industry could amount to as much as $500 million. However, the indirect impact is higher, as disruptions in semiconductor production can affect various end markets, including data centers, consumer electronics, automotive, and more.
Taiwan is a significant player in the semiconductor industry, accounting for a majority of foundry capacity and over 90% of capacity for advanced chips across various technology nodes. The earthquake serves as a reminder of the vulnerability of the semiconductor supply chain, especially in the aftermath of the Covid-19 pandemic.
Anurag Awasthi, Vice President of IESA, emphasizes the need for diversification and fortification of the semiconductor supply chain to mitigate risks associated with geographical factors and natural disasters. Efforts by countries like the US and India to bring semiconductor manufacturing in-house highlight the importance of reducing dependency on a few nations for critical components.
In conclusion, while the immediate impact of the earthquake on chip shortages remains uncertain, it underscores the necessity for proactive measures to strengthen and diversify the semiconductor supply chain in order to mitigate future risks.
