Taiwan Earthquake Could Mean Production Delays for Apple and Nvidia

  • A powerful earthquake in Taiwan forced chipmaker TSMC to suspend operations at certain sites.
  • That could cause production delays for companies like Apple, which rely on its chips.
  • The world’s largest chipmaker said it plans to resume operations overnight, Bloomberg reported.

A powerful earthquake that shook Taiwan’s east coast early Wednesday morning appears to have disrupted operations at the Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker.

That could pose a problem for big companies like Apple and Nvidia, which rely on its chips to power their technology.

The 7.4 magnitude earthquake, the most powerful to hit the island in the past 25 years, reportedly left nine people dead and more than 900 injured. It also damaged more than 100 buildings, according to the latest figures from the New York Times.

TSMC manufacturing facilities were also affected. Based in the Taiwanese city of Hsinchu, a company spokesperson told Business Insider that some of the global chip giant’s factories had been evacuated as a safety precaution, highlighting how vulnerable its facilities are to the activity seismic. While TSMC says all its staff are safe, some sites have been forced to suspend operations. The company says it hopes to resume production overnight, Bloomberg reported.

“Our critical tools, including all of our extreme ultraviolet lithography tools, suffered no damage,” the chipmaker told Bloomberg on Wednesday.

But if operations don’t resume as planned, it could cause problems for the business of TSMC – which supplies 90% of the world’s advanced chips – and for the supply chains of its biggest customers.

“It’s possible that this could cause a minor disruption,” Chris Miller, the author of the book “Chip War: The Fight for the World’s Most Critical Technology,” told Business Insider.

Apple relies on the Taiwanese company’s chips to power its iPhone, iPad and MacBook. In a worst-case scenario, disruptions at TSMC could lead to production delays for its existing products and subsequent rollout of its new devices. Nvidia, a US company that buys TSMC’s chips to develop its coveted GPUs used to power AI, could face similar repercussions, especially as demand for its graphics processing units outstrips supply in a context of current global shortage of chips.

Apple and Nvidia did not immediately respond to Business Insider’s requests for comment when asked what impact TSMC’s production disruptions would have on their businesses.

Analysts say halting production could also damage some of TSMC’s most advanced chips, which require around-the-clock maintenance, worsening production delays.

“Some high-end chips require 24/7 seamless operations in a vacuum state for a few weeks,” analysts Bum Ki Son and Brian Tan told Bloomberg. “Shutting down operations in northern Taiwan’s industrial zones could mean that production of some high-end chips could be spoiled.”

It is possible that TSMC will bounce back quickly. Miller, the chip expert, pointed to the 1999 Taiwan earthquake and how that caused disruptions to local chipmaking facilities for just a few days. This means that customers would not necessarily need to buy semiconductors in countries like the United States, which would cost up to 50% more to produce than in Taiwan, according to Citi Group. They just need to be a little patient.

“If there were disruptions, customers would not turn to other providers,” Miller said. “In most cases, they would just wait a little longer to get chips.”

“So far it is unclear whether there will be significant delays,” he said.


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