Taiwan, a major hub for the world’s top semiconductor companies, has experienced a series of earthquakes, leading to temporary delays in semiconductor supply and potential price hikes.
On April 23, the industry reported that over 50 aftershocks, ranging from magnitude 3.0 to 6.3, struck eastern Taiwan’s Hualien County between 12:01 a.m. and 4:12 a.m. The earthquakes could affect the semiconductor industry, particularly in western Taiwan’s Taoyuan and Taichung, where semiconductor and display production facilities are concentrated. In these areas, quakes of magnitude 1 to 3 were observed.
The 6.3-magnitude quake struck at 2:32 a.m., 17.2 km south-southwest of the Hualien County Government office. This region had also been hit by a 7.2-magnitude earthquake on April 3, which caused significant damage and loss of life.
As a result, disruptions in Taiwan’s semiconductor production seem unavoidable. While specific damages to semiconductor companies have not yet been officially reported, semiconductor equipment is designed to automatically halt operations upon detecting even minor vibrations. This can lead to product spoilage and production delays.
Taiwan’s leading foundry company, TSMC, reported losses of 3.0 billion Taiwanese dollars (US$92 million) due to the early April earthquake. Since it takes two to three months to produce semiconductor wafers, production delays could last for several months.
The latest earthquake could also affect memory prices. According to industry sources, 70% of DRAM produced in Taiwan comes from the Taichung, Hsinchu, and Taoyuan regions, which were impacted by the earlier quake.
The memory industry, which had temporarily paused negotiations and informed clients of potential supply delays after the April 3 earthquake, could face similar issues with this latest quake. The U.S.-based memory company Micron, in a report submitted to the U.S. Securities and Exchange Commission (SEC), estimated that DRAM supply in the current quarter could be impacted by 4-6%.
Memory prices are negotiated quarterly between suppliers and buyers, and supply disruptions could lead to price hikes. The memory industry might leverage these disruptions to increase semiconductor prices, especially in light of recent losses.
Market research firm TrendForce recently assessed that the impact of the previous earthquake on the memory market was limited, predicting a 3-8% increase in DRAM contract prices for the second quarter (April to June) compared to the previous quarter. However, with additional quakes, the semiconductor market could face more significant impacts. An industry insider noted that “as memory companies have just begun recovering from deficits, the recent earthquakes could accelerate price hikes.”
