Taiwan’s biggest earthquake in 25 years threatens chip market – Technologies

This Wednesday, Taiwan experienced the biggest earthquake since 1999. The region was hit by an earthquake measuring 7.4 on the Richter scale, making it necessary to go back 25 years to find an event of this size in that area.

The natural disaster destroyed dozens of buildings and, to date, caused seven deaths and hundreds of injuries. In addition to the direct impacts of the event, there is also another one, which puts pressure on the semiconductor sector worldwide.

Following the earthquake, Taiwan Semiconductor Manufacturing (TSMC) suspended production of some “chips” and evacuated some of its factories in the region, generating concern about possible disruptions in the supply of these components globally. This is because it is precisely in Taiwain that the largest volume of semiconductor production is concentrated, sbeing the region responsible for the production of around 80% to 90% of the most advanced “chips” that are used in different products, from cell phones to artificial intelligence systems. TSMC, the world’s leading chip manufacturer, is, for example, the largest supplier to Apple and Nvidia, with the effects of a possible disruption extending far beyond its territory. You only need to go back to the time of the pandemic to understand the effects that a disruption in semiconductor production could have.

In addition to TSMC, United Microelectronics also suspended production and evacuated some of its factories and centers in the cities of Hsinchu and Tainan, it said in a statement, cited by Bloomberg.

Semiconductor companies are still assessing the impacts of the earthquake, with TSMC saying that workers would begin returning to their jobs in the meantime. But any stop in semiconductor production threatens interruptions in a process that, especially in the production of more sophisticated “chips”, is extremely delicate. The alert is made by Barclays. “Some of the high-end chips need to be in a vacuum state without interruption for a few weeks”, say analysts Bum Ki Son and Brian Tan, cited by Bloomberg. According to them, “the suspension of operations in industrial areas in the north of the country could mean that some high-end chips could be damaged”.

The impact of the earthquake was felt with little expression in the markets. The TAIEX index registered losses of 0.63% to 20,337.6 points in today’s session, while TSMC saw shares fall 1.27% to 780 Taiwan dollars, while United Microelectronics lost 0.96% to 51.6 Taiwan dollars.