Taiwan's Drought Shows Climate Change’s Direct Threat to Tech
- Claire Anderson
- Taiwan Semiconductor
- climate change
- industry news
- market news
Taiwan is known for being one of the rainiest locations on the planet, thanks to its subtropical climate in the north and central areas, and tropical climate in the south. During the summer and autumn, typhoons are frequent, as are monsoons.
However, last year was a different story. For the first time in 56 years, Taiwan saw no typhoons in 2020, and so far this year, rainfall has been 40 percent less than normal. Most of the country's reservoirs are now below 20% capacity, with water levels in some dipping below 10%. Among them is the Baoshan second reservoir, a key water source for the island's chip industry.
The disaster has not only affected households and farms, but also the global chip supply chain. Since most consumer electronics are powered by semiconductors made by Taiwanese companies, if Taiwanese reservoirs dry up, the global electronics industry will suffer.
Taiwan boasts two-thirds of the world’s semiconductor manufacturing capacity. These chips sit at the heart of the tech industry and are essential in products like smartphones and cars. However, their production requires huge amounts of water to clean the wafers. Thanks to the surge in electronics sales caused by the pandemic, the world already faces a chip shortage, and the current drought in Taiwan is deepening these concerns.
To protect the $100 billion industry, Taiwan officials have enforced water rationing. Water supply has been suspended twice a week in four countries and towns. Three of the island's main science parks have been ordered to reduce their water use by up to 15%. They are home to a number of chip manufacturers, including Taiwan Semiconductor Manufacturing Company (TSMC).
Water reduction in industrial parks is currently at about 15%, which is less than the 20% that factories can withstand. In addition to increased water recycling, most factories are using trucks to bring in water. This is not a major problem in the short term, but it casts uncertainty over the chip industry in the coming quarter.
TSMC and other chip makers are preparing for the worst. According to TSMC, they are recycling more of the water they use, which is over 86 percent. The company is also buying water by the truckload from building sites and other locations. So far, TSMC said that production has not been affected.
However, experts warn that Taiwan’s water shortage could persist due to climate change. A spokesman for the Water Resources Agency, Kuo Yao-cheng, said that everyone will have to chip in to solve this issue.
"The government is taking measures to address these problems. … Everyone and every sector must think about how we can conserve water, especially because climate change will lead to insufficient rainfall," says Mr Kuo.
If Taiwan doesn’t rise to the challenge, its semiconductor industry could suffer in the coming years, adding pressure to a global supply chain that relies on the island for manufacturing.