Earthquake in Taiwan: limited impact on chip production

On Wednesday morning, Taiwan was rocked by an earthquake. The fact that most semiconductor manufacturers are on the island worries the industry.

On Wednesday morning, at 7:58 local time, Taiwan was rocked by an earthquake. The quake, with a magnitude of 7.4. It is the strongest earthquake to hit the region in 25 years.

Production stopped

The earthquake caused many casualties: preliminary figures indicate at least 7 fatalities, 700 injuries and 77 people trapped in collapsed buildings and tunnels. What does seem to have been spared is the chip industry, which has a large presence on the island. The Taiwanese Semiconductor Manufacturing Company (TSMC), the largest chip manufacturer in the world, stopped production for a while.

The shutdown was mainly for safety reasons. Earthquakes are usually accompanied by aftershocks, which in themselves can cause a lot of damage. TSMC itself has not yet released an update, but Synpower, a nearby electronics manufacturer, has already done so. There they note that the earthquake has “no significant impact” on finances and operations.

Other side of the country

This mainly has to do with the location of the earthquake. This mainly affected the east coast of Taiwan, while TSMC is more inland. It is difficult to determine whether the consequences for TSMC are also limited: making chips is a precise job. If TSMC equipment is disrupted, the production lines will first be recalibrated. In the meantime, TSMC staff has already returned to work, writes CNBC.

It is certain that Hualien City, which is close to the center of the earthquake, suffered a lot of damage. A lot of buildings came to the ground there. Yet they also experience a lot of trouble in the capital Taipei, north of the island. There, among other things, the internet would regularly fail.

The damage appears to be relatively limited on the Taiwanese stock exchange. There is a dip, but it is certainly not as significant as the earthquake suggests. The economic damage from the quake therefore appears to be less than expected for companies.