April 3rd 2024.
The recent 7.4 magnitude earthquake in Taiwan has caused concerns about the future prices of smartphones and other smart technology. This is because Taiwan is responsible for producing a large majority of the world's high-quality microchips, which are essential components in a variety of devices such as smartphones, laptops, cars, and the rapidly growing AI sector.
The earthquake resulted in the shutdown of several microchip manufacturing companies, including Taiwan Semiconductor Manufacturing Co, as they evacuated their factories for safety reasons. While this may not seem significant, even short disruptions can have a major impact on the supply of microchips. The production process for these chips is highly precise and often runs non-stop for weeks at a time.
Although most of the affected factories were located on the west side of the island, away from the epicenter of the earthquake, the tremors may have still been strong enough to damage entire batches of chips that were in production. Rescue teams are currently working to find and save any survivors who may be trapped in the rubble.
A statement from TSMC reassured the public that their safety systems were functioning normally, but some of their fabrication plants had to be evacuated as a precaution. They are currently assessing the extent of the damage and its impact on production.
The world is already facing a shortage of microchips due to the Covid-19 pandemic. This is not because of a decrease in production during lockdowns, but rather an increase in demand for tech products like smartphones, PCs, and laptops as more people began working from home. As a result, manufacturers have raised prices and shipping times have been delayed. The average wait time for a semiconductor has increased from 11 weeks in 2017 to 15 weeks in 2021.
The shortage has not only affected the tech industry, but also the automotive industry. Car manufacturers have experienced supply issues, causing delays in delivering new vehicles. This has also led to a decrease in the availability of second-hand vehicles, driving up prices and making it more difficult for buyers to find affordable options.
This shortage has highlighted concerns about relying so heavily on one small island nation for such a vital industry. Taiwan is also facing threats of invasion from China, further emphasizing the strategic importance of their semiconductor industry. In fact, there have been discussions about using the threat of destroying TSMC as a deterrent against Chinese invasion. While this idea was not well-received by Taiwan, it does highlight the significant role that Taiwan plays in the global supply chain for microchips. When their production is disrupted, the rest of the world quickly feels the effects.
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