Global media reports on the aftermath of the recent magnitude 6.4 earthquake in southern Taiwan have been largely optimistic about the potential impact on chip production in the region. Local media studied the situation more meticulously, and managed to come to the conclusion that TSMC risks rejecting up to 20,000 silicon wafers with chips due to the earthquake.
Image Source: TSMC
At least, such estimates are given by the Taiwanese publication Commercial Times, citing some official sources. At least the operation of the Fab 14 and Fab 18 plants in Tainan was suspended as a result of the earthquake; this may affect the company’s revenue in the first quarter in the form of a decrease of several percent. TSMC’s CoWoS chip packaging facilities were not affected, so in this regard the company will not let Nvidia down in terms of production volumes of chips for computing accelerators.
At TSMC construction sites related to the construction of new plants, industrial safety inspections were completed within the first 24 hours after the earthquake, after which work on the construction site continued. Although TSMC’s Tainan facilities are designed to withstand earthquakes up to magnitude 7.0, the recent disaster was of longer duration, which could disrupt the operation of process equipment. Some chip production lines had to be stopped for further inspection and restart. In such cases, downtime can last from a day or more.
Assessing possible damage from this point of view takes some time. So far, it is expected that a batch of silicon wafers ranging from 10 to 20 thousand pieces has been affected. In Tainan, TSMC produces 3nm and 5nm chips for large customers such as Apple, Intel, Nvidia and AMD. How their interests were damaged as a result of the earthquake has not yet been clarified. However, if we draw analogies with the stronger April earthquake in the region, its damage was limited to just over $92 million, taking into account payments from insurance companies, and TSMC’s profit margin in the second quarter ultimately decreased by half a percentage point.