A powerful earthquake with a magnitude of 7.4 on the Richter scale struck a major global semiconductor manufacturing hub on April 3rd. Several major players in the semiconductor industry have had to adjust their factory operations and are reporting significant losses following the natural disaster.
The strongest earthquake in 25 years shakes the semiconductor industry
According to the Central Weather Bureau of Taiwan, an earthquake occurred at 7:58 local time (6:58 Vietnam time) off the eastern coast of the island, with a depth of about 15.5 km. More than 25 aftershocks occurred after the earthquake. The Pacific Tsunami Warning Center said there is no longer a tsunami threat from this earthquake. The Philippine Seismological Agency has also lifted its tsunami warning.
The Japan Meteorological Agency (JMA) has revised the magnitude of the earthquake to 7.7, up from the initial 7.5. Japan initially issued a tsunami warning for the southern islands, but later downgraded it to an “advisory”. According to the JMA, the earthquake caused small tsunamis to hit areas in the southern Japanese prefecture of Okinawa.
The aftermath of the earthquake has had a significant impact on Taiwan’s advanced chip manufacturing industry, which is crucial for technologies such as artificial intelligence, smartphones, and electric vehicles.
The Impacts of Large Manufacturing Facilities
TSMC Reports $60 Million In After April 3rd Earthquake. TSMC (Taiwan Semiconductor Manufacturing Company) has announced a $60 million loss following the earthquake that occurred on April 3rd. The earthquake caused the evacuation of employees from some factory areas according to safety protocol. Although the factory buildings were mostly designed to withstand earthquakes up to level 7, they still suffered some damage. This damage included partial damage to quartz tubes and semiconductor wafers. TSMC estimates that the impact will result in a 6-hour loss of work time and a financial loss of approximately $60 million for the second quarter. Despite the losses, TSMC remains optimistic about the impact of the earthquake.
This company produces 90% of the world’s advanced semiconductor chips, supplying major names like Apple, Qualcomm, Nvidia, and AMD, and playing a key role in the artificial intelligence industry. David Bader, professor and director of the Institute for Data Science at the New Jersey Institute of Technology, warns of the threat posed by this incident.
Employees at some UMC (Lianhua Electronics) facilities in Hsinchu and the southern plant have been evacuated following standard operating procedures. All are safe, with facilities still operating normally. While some machines have been shut down, engineering staff are working to inspect and restore them.
Both Innolux and AUO, two major panel makers, have evacuated some of their plants following the earthquake. Innolux assured that they are following safety protocols and ensuring the safety of their employees. Some parts of Innolux’s plant have been evacuated and employees are still being kept safe. AUO’s plants in northern Taiwan have also been evacuated, and the effects of the earthquake are being investigated there. Production activities have not been significantly affected.
Yaohua Electronics’ PCB production line in Yilan suspended operation for inspection after the earthquake on the morning of April 3rd. However, no major damage was reported and it is expected to resume operation before noon the same day. Winbond Electronics’ employees are confirmed safe and the factory is still operating normally, the company is also assessing the actual impact. The production lines and operations of other OEM manufacturers such as Quanta, Compal, Wistron, Inventec and Pegatron are all not affected.
Taiwan’s semiconductor industry recovers after earthquake
TSMC (Taiwan Semiconductor Manufacturing Company) announced that it will resume operations within 24 hours after evacuating employees and suspending production. The company said there was no damage to its critical chip manufacturing equipment.
Taiwan’s largest chipmaker said it had restarted 70-80% of its equipment within 10 hours of the earthquake on April 3. Additionally, some minor damage to equipment at some of its fabs has been reported, but TSMC is deploying all available resources to ensure smooth operations.
UMC also announced that they would resume production and delivery as usual. Previously, UMC had suspended operations at some factories and evacuated some production and business facilities.
Many technology companies in Taiwan are still assessing the damage from the earthquake. Previously, Barclays Bank experts warned that the disruption of production in the northern industrial zones of Taiwan could disrupt the production of high-end chips, which need to be continuously produced 24/7 in a vacuum environment for several weeks.
However, damage assessments have quickly become more optimistic. Citigroup Inc. experts believe that the impact on TSMC’s production “can be managed,” while Jefferies Financial Group Inc. experts believe that the impact of the earthquake is negligible.
Taiwan plays a critical role in the global technology industry as a manufacturing hub for the basic semiconductor chips used in technologies such as artificial intelligence (AI), smartphones, and electric vehicles. Taiwanese companies, led by TSMC, are estimated to produce 80-90% of the most advanced types of chips.