Monday, 22 April 2024

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Taiwan’s biggest earthquake in 25 years could impact Nvidia supplier TSMC

Taiwan's biggest earthquake in 25 years could impact Nvidia supplier TSMC

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The 7.4-magnitude earthquake that hit Taiwan Wednesday morning could rock AI darling Nvidia after its main chipmaker Taiwan Semiconductor Manufacturing Company (TSMC) temporarily halted production and evacuated its factories.

TSMC said it moved staff from some production centers after its science parks in Hsinchu, Longtan, Zhunan, and Taichung experienced earthquake shocks with a magnitude up to 5.0. Initial inspections of TSMC’s construction sites were normal, but it said a “small number” of tools were damaged in certain production areas that partially impacted operations. Fabrication plant tool recovery was at over 70% within 10 hours of the quake, and none of TSMC’s critical tools were impacted, the company reported. The chip manufacturer’s local rival United Microelectronics Corporation (UMC) also took measures to evacuate certain facilities and halt some operations.

“TSMC’s safety systems are operating normally,” the company said in a statement to Fortune. “Preventative measures to ensure employee safety and well-being were initiated at that time according to procedure, and some fabs were evacuated. All personnel are safe and returned to their workplace shortly after the incident.”

UMC did not respond to Fortune’s request for comment. An Nvidia spokesperson told Fortune the company is monitoring the situation and ensuring employee safety, but has not released an official statement.

Nvidia is TSMC’s second-largest client, behind only Apple, and relies on the manufacturer to produce the semiconductor chips it designs for chip systems that power AI software and advanced graphics processing units. Last year, Nvidia paid the chipmaker $7.73 billion for its services, accounting for 11% of TSMC’s revenue, according to financial analyst Dan Nystedt. With a market capitalization of $2.2 trillion, Nvidia is the third-largest company in the U.S., effectively driving the AI revolution.  

TSMC and UMC shares faltered about 1.3% and 1%, respectively, early Wednesday, while Nvidia shares have remained steady.

Industry aftershocks

Wednesday’s earthquake in Taiwan was the country’s largest in 25 years, resulting in over 100 buildings being damaged. There are nine people confirmed dead and over 960 injured. While the earthquake hit the island’s east coast—with many of TSMC’s factories located on the west coast—there were over 29 aftershocks across the island with a magnitude over 4.0, capable of moderate…

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