Taiwan’s ongoing water crisis to acutely impact the global chip supply

Taiwan’s ongoing water crisis to acutely impact the global chip supply

Several chipmakers across Taiwan are reportedly purchasing truckloads of water to keep some of their foundries operational as the island, which is in the middle of an acute water crisis due to the ongoing drought, imposes more restrictions on its water supply.

Consequently, this phenomenon is expected to further exacerbate the problematic issue of chip supply shortage for the global automotive industry. In fact, some automobile manufacturers have already been forced into cutting down production. Taiwan had supposedly received numerous requests for help to alleviate the ongoing shortage of automobile chips from countries such as Germany and the United States.

Taiwan, which is an important hub for companies like Apple Inc. in the worldwide technology supply chain, plans to put in place restrictions that would effectively reduce the water supply designated to go to chip factories within southern and central cities, where a majority of the science parks are situated.

According to reports, water levels within a number of reservoirs throughout the island's southern and central region stand at less than 20%. The drought was declared following months of limited rainfall as well as a completely typhoon-free summer, which is rare for the region.

Economy Minister of Taiwan, Wang Mei-hua, has stated that the island has planned for the worst-case scenario. The government hopes that companies can cut down their respective water usage by as much as 7% to 11%.

Meanwhile, with forecasts of a scant period of rainfall in the months ahead, this week the Taiwan Water Corporation put out a statement saying that the island has now entered one of its ‘toughest moments’.

This week, the Taiwan Semiconductor Manufacturing Co Ltd., which is the largest contract-based chipmaker in the world, began placing orders for small amounts of water to be sent to some of its factories across the island by the truckload.

The company stated that, through these orders, it is essentially making preparations to address the future water demand that would be created in its facilities. The chipmaker described the effort as a ‘pressure test’ and emphasized that has not seen any impact on production.

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Nandita Bhardwaj

Nandita holds a management degree with specialization in marketing, and boasts of a short-term experience in the field of recruitment. Following her passion for writing however, she decided to pursue a career in the field of content development. Presently, Nandita pens down news pieces for, spanning the verticals of business, finance, and technology.