TSMC halts some chipmaking production after strongest Taiwan earthquake

Taiwan Semiconductor Manufacturing Co. (TSMC), the leading producer of advanced chips globally, was compelled to suspend operations and evacuate personnel following the most significant earthquake to hit Taiwan in a quarter-century. The seismic event, measuring 7.4 in magnitude, prompted TSMC, along with other semiconductor manufacturers, to assess the potential impact on their operations and infrastructure.

As the primary contract chipmaker for tech giants like Apple Inc. and Nvidia Corp., TSMC plays a pivotal role in the semiconductor supply chain. The company took swift action in response to the earthquake, relocating employees from affected areas and temporarily halting chipmaking machinery to ensure the safety of its personnel and equipment.

TSMC’s precautionary measures were echoed by its local rival, United Microelectronics Corp. (UMC), which also suspended machinery operations and evacuated certain facilities in Hsinchu and Tainan. These steps underscore the vulnerability of semiconductor manufacturing facilities to seismic activity, given the precision and delicacy of the manufacturing processes involved.

Taiwanese semiconductor firms, including TSMC and ASE Technology Holding Co., dominate the global market, supplying chips for a wide range of devices, from smartphones to automobiles. However, their concentrated presence on an island prone to earthquakes exposes them to inherent risks, as even minor vibrations can compromise the integrity of semiconductor production.

The impact of the earthquake reverberated beyond operational disruptions, affecting the financial performance of semiconductor companies. TSMC shares experienced a decline of approximately 1.5% in early trading, reflecting investor concerns about the potential ramifications of the seismic event on the company’s production capabilities and financial outlook. Similarly, UMC saw a marginal decline in its stock value, albeit less pronounced than that of TSMC.

In response to inquiries regarding the situation, TSMC assured stakeholders that its safety systems remained operational and that evacuation procedures were enacted in accordance with company protocols. However, the full extent of the earthquake’s impact on semiconductor production is yet to be determined, as companies continue to assess damages and evaluate the resumption of operations. Also, TSMC being the largest chipmaker in the world obviously has shareholders worried about production being halted and they will take a huge breath of relief after this update.