NewsMassive quake disrupts global chip supply, hitting Taiwan's tech heart

Massive quake disrupts global chip supply, hitting Taiwan's tech heart

Earthquake in Taiwan. The largest since 1999 affected the activity of the microchip factory.
Earthquake in Taiwan. The largest since 1999 affected the activity of the microchip factory.
Images source: © via Getty Images | 2024 Anadolu, Ministry of Interior Handout

6:04 AM EDT, April 4, 2024

The strongest earthquake to hit Taiwan in 25 years has impacted operations at Taiwan Semiconductor Manufacturing (TSMC), the global leader in chip manufacturing. Some of the company's factories have halted operations as a result.

A powerful earthquake, measuring 7.2 on the Richter scale, struck Taiwan in the night from Tuesday to Wednesday Eastern Time, followed by a series of aftershocks. Tsunami warnings were issued by authorities in Japan, the Philippines, and Taiwan, according to Wirtualna Polska.

The head of the Seismological Center in Taipei highlighted that this was the most powerful earthquake Taiwan has seen since 1999.

Impact of the earthquake on the tech industry

According to American Business Insider, the earthquake prompted evacuations of personnel in Xinzhu, a hub for the tech industry. Additionally, several microprocessor production facilities ceased operations pending safety inspections and assurances that resuming work was safe.

A TSMC spokesperson stated, "The company is currently assessing the impact," adding that preliminary inspections indicate the facilities are "normal."

The incident underscores the vulnerability of the global microprocessor supply chain. TSMC is a critical player in the industry, responsible for producing 90 percent of advanced processors, BI notes.

Taiwan is home to TSMC and other smaller chip manufacturers, making the island a vital player in the global semiconductor supply chain.

Potential global economic impacts of a conflict over Taiwan

The discussion extends to the potential consequences of a Chinese invasion of Taiwan on the global chip industry. Beijing views the island as a separatist province that should be reintegrated with the Middle Kingdom.

An event as disruptive as a major earthquake affects TSMC's operations significantly; a more catastrophic event, such as a Chinese invasion claimed by Beijing, would have a far-reaching impact on the already fragile global supply chains, according to BI.

Bloomberg estimates reveal that should a conflict involving Washington occur, the U.S. GDP could see a reduction of about 6.7 percent, while a blockade by Beijing could lead to a drop in GDP of more than 3 percent.

A conflict over Taiwan could cost the global economy a staggering 10 trillion dollars. The American Center for Strategic and International Studies (CSIS) created a simulation predicting a Chinese attack in 2026, a date linked to the CIA's claim that China's leader Xi Jinping desires the Chinese military to be prepared for a takeover of Taiwan by 2027.

CSIS believes that while China would face significant economic difficulties in the event of an invasion, for Beijing, Taiwan remains crucial in its international policy ambitions. PRC chairman Xi Jinping has frequently expressed his intention to achieve the "unification of China."

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