The earthquake off the coast of Taiwan has blocked chip production in the country which is currently the largest chip producer in the world. According to Bloomberg, TSMC (Taiwan Semiconductor Manufacturing), the main chip manufacturer for Apple and Nvidia, has moved staff from some areas, saying it wants to evaluate the impact of the earthquake before resuming production. Just as United Microelectronics, a competitor of Tmsc, stopped production. The earthquake was magnitude 7.4, was recorded off the east coast of the island and struck before 8:00 am local time.
Taiwan’s key role in chip manufacturing
TSMC produced more than 16 million 12-inch silicon chips in 2023 at four plants. The company calls them “fabs.” They are all based in Taiwan and create silicon ‘wafers’ for 528 customers. But they are fragile factories. “Vulnerable to even the slightest shock,” the company said, and a fleeting vibration it can destroy entire batches of semiconductors.
TSMC sources told Nikkei (Japanese news agency) that “some wafers have cracked” and that employees will be recalled during the upcoming tomb-cleaning holidays to make up for lost production. The company has invested heavily to minimize earthquake risks and says its operating principles are: “Zero casualties, short recovery times and minimal impact on customers.”
The blockades of the past: from Covid to China, and now earthquakes
The blockade of Taiwan’s factories worries the West. In recent years, both the United States and Europe have highlighted the risks of having only Taiwan-based companies as the sole chip supplier.
In recent years, public attention has focused on the disruption of the global supply chain in the event of military conflict with China, as happened during the Covid years when the stoppage of semiconductor factories in Asia caused those ‘bottlenecks’ to the production chains which caused problems in the production of goods in every nation of the world for long months, affecting every tech industry, from the production of devices to the car industry.
But another one is now being added to these risks. Earthquakes. A shock in 2022 was a “reminder that the global supply of chips remains highly vulnerable to disruptions”, wrote a Credit Suisse analysis recalled by AFP at the time, noting that with too many disruptions “a wide range of production would be severely disrupted”.
Because chips are critical to industry
Chips now play a fundamental role in industry. They are everywhere, from smartphones to cars. And their demand has increased exponentially with the advent of artificial intelligence. The reason is simple.
If Artificial Intelligence is the new gold of the technological industry’s desires, microprocessors are the tools that will help us find it. A rather popular metaphor among industry analysts is that they are like pickaxes, shovels and sieves in the hands of new explorers. Without these tools, AI gold is inaccessible.
AI is not an industry in itself. But it is technology capable of transforming all possible industries. The gold is there, in its possible developments. And microprocessors are the enabler of this process.