Taiwan’s strongest earthquake shocks the supply chain of semiconductor

Taiwan’s strongest earthquake shocks the supply chain of semiconductor

China Earthquake Networks Center officially determined that at local time 07:58 on April 3rd, a magnitude 7.3 earthquake occurred in the sea area of Hualien County, Taiwan (latitude 23.81 degrees north, longitude 121.74 degrees east), with a depth of 12 kilometers.

According to Taiwan's China Times News, a perceptible earthquake occurred at 07:58 on the 3rd, with an initial estimate of an above-magnitude-4 earthquake in the following areas: Hualien, Yilan, Taoyuan, Hsinchu, Hsinchu, and Miaoli, Central, Northern, Kaohsiung,?Pingtung, Chiayi and Tainan.

According to Taiwan's United Daily News, Taipei City experienced severe shaking for at least 1 minute, and Taipei Metro stations suspended operations for 40 to 60 minutes. People of the stations?stated that due to the earthquake on the morning of the 3rd, all stations suspended operations for about 40 to 60 minutes for safety checks.

The earthquake was strongly felt in surrounding areas, including Fujian and Xiamen in China, and Hangzhou. It also triggered a tsunami in Japan. According to NHK, a tsunami arrived at Okinawa and Yonaguni Island at 9:14 am local time on April 3rd, with a wave height of 30 cm observed at Yonaguni Island at 9:18 am.

How will this earthquake impact semiconductor manufacturing companies?

Taiwan, China, as an integral part of the global semiconductor manufacturing supply chain, hosts 11 major semiconductor manufacturing companies, including?TSMC, UMC, Powerchip, Vanguard, WIN Foundry, Mosel Vitelic, AMPI, PSI, MXIC, Episil, and Nuvoton. In terms of?incomplete statistics, the total production capacity of semiconductor wafer fabs in Taiwan is as high as 2.1 million wafers, and it is still expanding.

Research institution?TendForce?reported that?the market value of chips?in this region, ranked second globally in 2021, with the largest market share of 64% in wafer foundry?in the world. In 2022, its?12-inch wafer capacity accounted for approximately 48% of worldwide?wafer foundry capacity.

Which semiconductor companies in the affected areas are shaken?by this earthquake?

TSMC

Most of TSMC's manufacturing plants (also known as fabs) are located in Hsinchu, Taichung, and Tainan. These fabs are equipped with the most advanced semiconductor manufacturing equipment and processes, enabling TSMC to produce cutting-edge chips. According to Taiwanese media reports, TSMC's fabs are almost all in areas affected by above-magnitude-4 earthquakes. In 2021, TSMC's customers included Apple, Broadcom, Huawei Hisilicon, Intel, MediaTek, Nvidia, NXP Semiconductors, Qualcomm, Sony, and Xilinx, etc.

UMC

UMC's major 12-inch and 8-inch wafer fabs?and R&D centers are built?in Hsinchu City, Taiwan. UMC currently has twelve wafer fabs with a total monthly capacity of roughly?850,000 wafers, mainly advanced?process 8-inch wafers, and all chip products meet the automotive industry's IATF 16949 certification.

Major clients?include leading IC design companies such as MediaTek, Novatek Microelectronics, Realtek, Himax Technologies, ILITEK, and Phison, as well as international clients like Samsung, Qualcomm, and NXP Semiconductors.

Powerchip

Powerchip has three 12-inch wafer fabs (P1, P2, P3 fabs) and two 8-inch wafer fabs in Hsinchu City and Miaoli City. The 12-inch wafer fab is currently the largest memory chip manufacturing plant?in Taiwan. Major partners?cover?Advanced Power Electronics, Himax Technologies, MediaTek, and NXP Semiconductors.

Vanguard's 8-inch wafer fabs are all established?in Hsinchu City, Taiwan, with an average monthly capacity of about?279,000 eight-inch wafers in 2023.

WIN Foundry

The company has three production bases located in Hwaya Technology Park, Taoyuan City, Taiwan. In 2021, the company's market share in the global gallium arsenide wafer foundry notched 77%, the world's largest gallium arsenide wafer foundry. The company's main clients?include?Broadcom, Murata, Skyworks, Qorvo, Lumentum, etc.

Regarding the Taiwan earthquake, a spokesperson for TSMC stated that to ensure the safety of personnel, some plant areas have been evacuated?following?the company's internal procedures, and the extent of damage is currently under investigation.

Currently, some quartz tubes in TSMC's plant buildings are broken.?There is partial damage to the online wafers.?Some machines have been temporarily shut down for inspection to prevent deviation. Based on the existing?situation, it is estimated that the impact on working hours will be within 6 hours, with an estimated impact of around?$60 million on TSMC's second-quarter financial forecast.

According to analysts, the repair and debugging of TSMC's equipment will definitely affect the production progress of Nvidia GPU wafers, which may cause delays and subsequent price increases. Moreover, storage equipment needs maintenance and debugging as soon as there is a?magnitude-5 earthquake. Generally, the process?can take up to 3 months if it's long or 1 month if it's short, which may further increase memory chip?prices.

UMC stated that personnel in the Hsinchu Science Park and Southern Science Park were evacuated according to operating standards, and all personnel was safe.?Facilities were running normally, but some machines were shut down, and engineering personnel are working hard to resume operation.

The Hsinchu Science Park Administration in Taiwan reported that since the earthquake occurred during working hours, it not only caused traffic chaos within the park but also led all night shift workers in various technology plants to evacuate. Fortunately, no casualties have been reported so far. The Administration added?that the King?Yuan Electronics and Taimide Tech?in the park have reported full evacuation of all personnel, with some preventive and partial shutdowns at?Powerchip, TSMC, and Innolux. Normal operations were reported at?AUO Corporation,?UMC, TSMC, MXIC, and Powerchip.

According to reports, as of 13:00 on April 3rd?local time, the latest statistics show that the earthquake has caused 4 deaths and 57 injuries.