Taiwan chip makers’ water supplies cut as drought threatens island’s reserves

Authorities cut supply to companies in two major science parks by 15 per cent, with reservoirs in several parts of central Taiwan dangerously low
Dry spell pressures government to ensure supply to water-intensive industries such as the island’s world-leading semiconductor manufacturing

Taiwan

Bloomberg

Published: 12:30pm, 25 Mar 2021

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Taiwan has stepped up its fight against its worst drought in decades, further reducing water supplies to areas including a key hub of semiconductor manufacturing in the central part of the island, in an effort to stop reserves from running dry.

The government issued its first red alert on water supply in six years on Wednesday, warning that reservoirs in several parts of central Taiwan were running dangerously low. Authorities will cut the water supply to companies in two major science parks in Taichung by 15 per cent, Economics Minister Wang Mei-hua said at a briefing in Taipei.

Water will also be cut to non-industrial users across Taichung and Miaoli County two days a week, Wang said. The measures will come into effect from April 6.

Taiwan Semiconductor Manufacturing Company (TSMC) and Micron Technology both have chip-making operations in Taichung, although Wang said the restrictions would not affect their production. TSMC’s headquarters further north in Hsinchu has been spared further restrictions for now.

TSMC plans to increase the amount of water it uses from tanker trucks but the new restrictions will not affect operations, according to an emailed statement. A Micron representative in Taiwan declined to comment, saying the company was in a quiet period.

The relative dry spell is putting pressure on the government to ensure continued supplies to water-intensive industries, such as its crucial semiconductor manufacturing, at a time when global companies are clamouring for computer chips.

A shortage of semiconductors has slowed output at carmakers worldwide, prompting TSMC and its peers to run their fabs at close to full capacity to try to keep up with demand.

Taiwan’s usually ample supplies of water have plummeted after a significant drop in rainfall last year. The situation was exacerbated by the fact that no typhoons made landfall in Taiwan in 2020.

Taiwan’s grip on semiconductors ‘a choke point’ in global supply chain

Wang said earlier this month that Taiwan had sufficient water reserves to keep its technology companies operating smoothly until late May, when seasonal rains usually replenish supplies depleted during the drier winter months.

The meteorological situation adds a new challenge for TSMC as it grapples with competition from Samsung and Intel, which has unveiled a US$20 billion plan to create a foundry business that will make chips for other companies.

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