The 7.4 magnitude earthquake that struck Taiwan on April 3 risks disrupting the production of semiconductors, a specialty of the island located in the southeast of China. Close to the epicenter, the city of Hualien, in eastern Taiwan, suffered most of the damage: the collapse of several buildings, roads and tunnels left at least nine dead and more than a thousand injured. The factories of Taiwanese semiconductor giants, located on the west coast, suffered less violent tremors.
Having evacuated its factories immediately after the first tremors, the world number one in the sector, TSMC, announced on Wednesday afternoon that it had resumed work. “TSMC security systems are functioning normally. To ensure the safety of personnel, some factories were evacuated in accordance with company procedure. We are currently confirming details of the impact »the company said in a press release.
On an Asian scale for measuring tremors, the earthquake that hit Hualien exceeded 6 out of 7 units, while Hsinchu, which hosts most of the semiconductor industry, about sixty kilometers from Taipei, was affected. by shocks of 5, associated with minimal damage. However, the precision required for the production of electronic chips is such that the slightest vibration of the machines can lead to the loss of a batch of chips during manufacturing. Adjusting the machines after the fact could take some time.
Concentration
TSMC shares fell 1.3% on the stock market after the earthquake, and UMC, another chip giant, lost 1%. “Shares of TSMC and other Taiwanese technology companies like Foxconn and AU Optronics fell after the earthquake, reflecting investors’ concerns about possible disruptions. Severe damage to Taiwan’s chip foundries could ripple through global supply chains and underscores the urgency of reducing dependence on Taiwan for chip production »analyzes, in a note, the British broker IG Group.
The earthquake is a reminder of the risks linked to the concentration of chip production in this territory located at the junction of two tectonic plates. Taiwan produces 60% of the world’s chips and 90% of the most advanced chips. And, in addition to the seismic risk, Taiwan lives in the shadow of the Chinese threat: Beijing does not hide its desire to “reunify” the island, which she considers a rebel province, “by force if necessary”.
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