The worst earthquake to strike Taiwan in at least 25 years is expected to cause a shortage of technological components, including semiconductors and display panels, according to analysts, when the country's manufacturers restart operations at damaged sites.
On Wednesday morning, a strong 7.2-magnitude earthquake in Hualien County in Taiwan caused nine fatalities and over a thousand injuries. Due to its location as the home of Taiwan Semiconductor Manufacturing Co., the largest chipmaker in the world and the supplier of chips to Nvidia and Apple, the island has a significant impact on the worldwide chip supply chain.
Smaller chipmakers including Powerchip Semiconductor Manufacturing, Vanguard International Semiconductor, and UMC are also located in the nation.
According to observers, Taiwanese manufacturers have been strengthening their buildings to withstand earthquakes for many years, and many of them utilize automated shutdown mechanisms to reduce damage to their equipment and output.
Dan Hutcheson, vice chair of Canadian research company TechInsights, stated, "For a lot of the tools that go into automatic shutdown, it can take you no more than 36 or 48 hours to bring them back up and re-qualify them."
"The likelihood is that this won't have an impact on quarterly revenues when considering the business side of things. However, getting this stuff back up and running is going to be a major pain point for all parties concerned."
"Mitigating the impacts of the earthquake necessitates careful measures and time to restore production and uphold quality standards, presenting additional implications and obstacles," they stated.
The Tainan activities of TSMC for advanced process nodes, including 4/5nm and 3nm, have been put on hold, they announced. Furthermore, the site's extreme ultraviolet (EUV) lithography apparatus, which is essential for these advanced nodes, was shut down for eight to fifteen hours.
According to Barclays analysts, certain extremely complex semiconductor fabs must run flawlessly in a vacuum condition for several weeks, and any disruptions to this process would increase pressure on prices in the industry.
They added that this may have a "short-term hiccup" effect on the electronics manufacturing industries in countries that prioritize upstream products, like Korea and Japan, as well as downstream product-focused economies, like China and Vietnam.
According to the research, Taiwanese and Korean chip manufacturers may be able to boost prices if clients have reduced inventory levels.
TrendForce, a research group, predicted that shipments of television panels will also be impacted since suppliers are expected to become more scarce following the earthquake, and producers have already been working at almost full capacity throughout the globe to satisfy steady demand.
It stated that although TV panel costs were expected to rise through April, the earthquake's long-term effects would be minimal unless Taiwanese panel manufacturers were compelled to halt production for longer than a week.