Drought Hits Lagging Chip Production In Taiwan

Taiwan’s crucial microchip sector is under threat from the country’s worst drought in 56 years. The government has issued assurances that there are sufficient water supplies to keep the industry going until late May, when it hopes monsoon rains will alleviate the looming crisis. Meanwhile, it has urged companies to reduce water consumption by 7 to 11 percent.

Speaking to the media, the head of the country’s Ministry of Economic Affairs, Wang Mei-hua, said that Taiwan has seen just 20 millimetres of rain so far this spring, compared to an average of 100 millimetres. This follows a complete absence in 2020 of the typhoons that would normally restock the island’s water supplies. Hsinchu City, home to several major chip makers, received just half its usual rainfall in 2020.

With water levels at six of Taiwan’s reservoirs standing at between 10 and 15 Percent, the world’s largest chip maker TSMC is already reportedly buying water by the truckload to prop up manufacturing operations that are already struggling to meet global chip demand in major sectors such as automobile manufacturing.

Last month, Volkswagen criticised the semiconductor supply chain for bad planning in its response to the recovery in automotive manufacturing following last year’s coronavirus shutdowns. The world’s second-largest carmaker is one of several forced to curtail vehicle production due to chip shortages.

The supply issues have prompted several countries, including the US, to look closely at ramping up their domestic chip supply chains to reduce dependency on Taiwan, which is one of the world’s biggest providers of subcontract chip fabrication (fabs). Taiwan has already been forced to defend the resilience of its chip making sector in the face of a push by China to develop its own semiconductor industry.

Making microchips is a thirsty business. According to TSMC’s own figures, it needs 156,000 tonnes of water a day, a large proportion of which is Ultra Pure Water (UPW), which is thousands of times purer than drinking water and so clean that it is regarded as an industrial solvent.

In its most recent social responsibility report, TSMC says it reused 86.7% of its water (133.6 million tonnes) in 2019 and saved a further 7.93 million tonnes.