Drought Dries Up Computer Chip Supplies

April 17, 2021

Apple reportedly faces shortage of power management chips for iPhone, other  devices | AppleInsider

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Wall Street Journal:

TAIPEI—The worst drought in half a century is hitting Taiwan, adding strain to an island that is home to two-thirds of the world semiconductor manufacturing capacity during the worst global chip shortage in recent memory.

The drought’s impact on semiconductor producers, which require voluminous quantities of water to churn out chips, is so far modest as the government creates exceptions for these manufacturers. But companies are starting to make adjustments, and officials have warned that the water shortage could worsen without adequate rainfall.

Taiwan’s semiconductor wafer-fabrication factories, or fabs, account for 65% of global production, according to the research firm TrendForce. Most of that capacity belongs to Taiwan Semiconductor Manufacturing Co. TSM 0.41% , the world’s biggest contract chip maker.

“Taiwan is the center of gravity for semiconductor manufacturing,” said Syed Alam, global lead of the semiconductors practice at Accenture. “This is one thing you don’t need adding more pressure on the situation.”

Seasonal typhoons provide Taiwan with much of its water reserves. But a lack of storms last year has strained supplies, prompting the government to start rationing water for more than a million businesses and residents.

The heightened risk comes as the global chip supply has been battered by a series of natural disasters just as demand for semiconductors has soared from auto makers and electronics companies around the world.

Severe weather in Texas earlier this year forced Samsung Electronics Co. to close two of its chip factories in Austin temporarily. The auto chip maker Renesas Electronics Corp.’s plant in Japan was hit first by an earthquake in February and then a fire in March that executives said would require months for recovery.

Taiwan’s three science industrial parks, which house most of the island’s chip-making facilities, have had to curb their water intake but are so far exempt from stoppages, which has helped stave off disruptions. Still, some companies are feeling the pinch.

Micron Technology Inc., a U.S. chip maker with Taiwan facilities in Taichung and Taoyuan, said securing alternative sources of water and speeding up conservation would increase production costs after supply to one of its Taiwan-based memory-chip facilities was reduced.

Meantime, TSMC and United Microelectronics Corp. UMC 2.38% , both of which are based in Hsinchu, Taiwan, have arranged for trucks to bring in additional water supplies. TSMC said it is also in talks with some companies to use groundwater from their construction sites.


Apple supplier TSMC today said it is doing all it can to increase productivity and alleviate the worldwide chip shortage, but that tight supplies will likely continue into next year.

The comments followed a reported 19.4% rise in the Taiwanese firm’s first-quarter profit, which beat market expectations, thanks to strong chip demand and a global shift to home working.

TSMC did not mention Apple specifically, but it is a major Apple supplier and this suggests that the ongoing chip shortage could continue to impact Apple. TSMC produces A-series chips for the iPhoneiPad, and Apple silicon chips for the Mac. Foxconn, another Apple supplier, said in March that it expects the global chip shortage to extend into the second quarter of 2022.

An earlier report claimed Apple is facing a global shortage of certain components for some of its MacBook and ‌iPad‌ models, which is causing the Cupertino tech giant and its suppliers to postpone production of the products. Samsung is also said to be feeling the impact in its production of OLED displays, which Apple uses in its iPhones.

The ongoing chip shortage was caused by supply chain issues that arose during the global health crisis and weather-related events like the freeze in Texas that shut down Austin chip plants.

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