Saturday, 13 April 2024

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How chipmaker TSMC bolstered its foundry to fend of Taiwan’s biggest earthquake in 25 years

How chipmaker TSMC bolstered its foundry to fend of Taiwan's biggest earthquake in 25 years

Taiwan Semiconductor Manufacturing Company (TSMC), the semiconductor chip-making juggernaut, evacuated its workers after a 7.4 magnitude earthquake rocked the country on Wednesday, reporting no major damages. Its employees returned to work only hours after aftershocks rippled through the island. It’s not the company’s first rodeo in navigating natural disasters.

TSMC, the primary chip supplier for Apple and AI darling Nvidia, told Fortune it moved its workers from some of its production centers as a precautionary measure and temporarily halted operations during the earthquake and its immediate aftershocks. While the company reported damage in a “small number” of tools and has an ongoing inspection to assess full damages, it said its fabrication plants recovered 70% of tools within 10 hours of the earthquake, and that its “critical tools,” such as its multimillion-dollar extreme ultraviolet lithography tools, remain unharmed.

“TSMC is deploying all available resources for full recovery, and impacted facilities are expected to resume production throughout the night,” TSMC said in a statement to Fortune.

The manufacturer, as indicated by their damage limitations, is no stranger to being nimble in the face of natural disaster. Taiwan has about 2,200 earthquakes a year, according to the Central Weather Administration Seismological Center, over 200 of which can be felt. The ubiquity of these events has simply forced the company to make necessary changes to its operations.

“Seismic activity is a huge challenge for firms carrying out the most precise manufacturing processes of any industry,” Mark Williams, chief Asia economist of Capital Economics, wrote in an April 3 note. “But it is one that Taiwanese chipmakers have grown up with.”

TSMC did not tell Fortune the conclusions of its inspection or how the work stoppage will impact business, but there is a precedent for Wednesday’s setbacks: In 2016, a 6.6 magnitude earthquake shook TSMC’s Tainan fabrication plants. Following the disaster, the company insisted that the quake wouldn’t impact first-quarter shipments more than 1%. Indeed, wafer chip shipments saw a 1.8% quarter-over-quarter dip, but revenue for the quarter plummeted 8.3%.

“Although the February 6 earthquake caused some delay in wafer shipments in the first quarter, we saw business upside resulting from demand increases in mid- and low-end smartphone segments and customer inventory restocking,”…

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