Earthquake in Taiwan could lead to a new chip crisis

A strong earthquake was recorded 21 kilometers from the city of Hualien, Taiwan. With a magnitude of 7.7, the largest recorded in the last 25 years in the region, the tremor this Wednesday (3) left at least 9 dead. In addition to 800 injuries, it collapsed 26 buildings and generated tsunami warnings in neighboring countries, such as Japan and the Philippines. The consequences are already beginning to appear, such as the stoppage in the manufacturing of chips and components.

Earthquake affects chip market

Faced with this scenario, TSMC (Taiwan Semiconductor Manufacturing Company), the largest manufacturer of semiconductor chips on the planet, chose to temporarily halt operations to ensure the safety of its personnel.

In a statement released shortly after the earthquake, the company said it was assessing the severity of the impacts. Currently, the company produces approximately 16 million 12-inch chips daily in four factories located in Taiwan, in addition to several smaller models in other factories.

In addition to producing the overwhelming majority of chips on the planet, the brand has on its list of customers some technology giants such as Apple, Nvidia, among others.

Although the company has poles prepared to resist earthquakes, even light tremors can damage some units. That is, even entire batches of chips. Some company spokespeople also confirmed that after a preliminary assessment, some damaged waffles were identified. But the real extent of the damage is still unknown.

Concentration of chip production in Asia worries Europe and the USA

This Wednesday’s earthquake reignited an alert. Which is about the risks that the concentration of chips in Taiwan and other countries in areas susceptible to tremors means. Customers in the electronics and automotive markets need components to produce their products around the world.

Recently, the world faced a shortage of semiconductors, which affected several industries and resulted in billion-dollar losses. In Brazil, for example, some vehicle manufacturers had to halt production for several days due to a lack of chips.

US gives Intel $8.5 billion incentive to invest in factories

If TSMC’s facilities or machinery are severely damaged, it could mean a return to the semiconductor crisis, which would be a complete disaster.

Finally, to avoid future problems, which could be caused by earthquakes or the diplomatic crisis between the USA and China, the Taiwanese company invests in the construction of production centers. Mainly in Europe and the United States, which are expected to open and begin operations in the coming years.