TAIPEI – Taiwanese technical manufacturers fear their production is at risk from the island’s worst thirst in decades, adding further disruption to global supply chains already strained by a shortage of semiconductors and other key components.
The Taiwanese government on Thursday tightened water use in several major cities that are home to a group of key manufacturers. Plants in Taoyuan, Taichung, Hsinchu and Miaoli will have to cut consumption by up to 11%, in addition to a 7% cut requested last month.
Manufacturers in the cities of Chiayi and Tainan – where Taiwan Semiconductor Manufacturing Company, the world’s largest contract maker, is building iPhone processors – will be asked to reduce water consumption by 7% from Thursday.
Taiwan is one of the world’s most important sources of advanced chipsets that power everything from cars and phones to game servers and consoles. Chip production requires a lot of water, but reservoirs in Taiwan are very low and authorities have already cut products to agriculture to support industrial and residential use.
The water worries come as the chip sector is battling global shortages. Taiwan has pledged to help countries like the US, Germany and Japan by accelerating the manufacture of car chips to alleviate global crushing already on car production.
“Every business is worried about the imminent easing of the situation. … No one wants to see the worst case scenario where anyone has to regain production capacity due to water issues,” “said a chief executive at Winbond, a leading memory chipmaker, Nikkei Asia told.
Large business users will be surveyed weekly to ensure targets are met, a senior government official told Nikkei Asia.
The water needs of the island’s manufacturers are growing despite efforts to secure supply.
TSMC needs 156,000 tons of water per day, according to the company – about one-third of the water used in Taiwan’s main science parks. The company has begun contingency plans to move trucks from this week to take water to production plants across the island.
Water quality is “extremely critical to chip production lines and processes. … It can affect product performance, so it needs to be handled with care,” said someone familiar with the plan. “So far it is possible to manage the situation, but if it is not raining properly and continuing like this until the end of May, that would be a real big problem.”
TSMC has long-term contracts with water truck companies, which provide groundwater and spring water that the chipmaker uses to divert water from reservoirs in times of scarcity, the person familiar with her said. ‘plana.
Nina Kao, a spokeswoman for TSMC, said of the plan to truck water: “Usage remains limited and the main purpose is to prepare the workers involved for future needs.”
TSMC reused 86.7% of its water, or 133.6 million tonnes, and saved an additional 7.93 million tonnes in 2019, according to its latest social responsibility report.
United Microelectronics, chip contract No. said. Taiwan said it will begin calling for water trucks to support production from Thursday, CFO company and spokesman Liu Chi-tung told Nikkei.
“With the need to increase the water saving rate to 11%, we need support from additional water trucks,” Liu said. “Right now we only need a small percentage of extra water, but the company will change accordingly based on the dynamics.”
Winbond, which has the majority of production in downtown Taichung, has also tested additional water trucks, the company’s chief executive said. The memory chipmaker has created a business continuity plan to operate normally if the situation worsens and the water saving rate must reach as high as 25%, the person said.
AU Optronics, a display provider for Apple and Tesla, has prepared a series of measures to save water if the situation worsens, including reducing consumption in manufacturing, staff restaurants and places- wait, to keep his works going.
Unimicron, the world’s largest manufacturer of ajinomoto-build-film board – the main substrate for high-end computing chips and chips used in 5G base stations – said water scarcity is a cause concern, especially around Hsinchu, the heart of the chip industry.
“We have been conserving water and will use rental water trucks to support our use if necessary,” CFO company Michael Shen said in an employment call on Wednesday. … it will be difficult for us to deal with it. “
Water storage levels at Baoshan and Baoshan Second reservoirs – which supply Hsinchu Science Park – were at just 25.6% and 14.7% at noon Wednesday.
For the two reservoirs that provided Taichung Science Park, storage rates were 16.6% and 13.9%, respectively, while the reservoir for Tain Science Park was only 15%.
Data from the Water Resources Agency shows that these reservoirs can only provide water for between 30 and 60 days if there is not enough water to recharge them.
Taiwan’s chip region, the second largest after the U.S., is the crown jewel of the island’s economy. But Taiwan’s water supply, electricity and labor are creating uncertainty for long-term economic growth.
Taiwan typically averages at least three typhoons per year, providing much-needed rainfall, but none of them hit the island in 2020. The country’s average reservoir water level is 1,000 millimeters. lower than a year ago, according to Water Resources Group.
“Certainly the situation is more ‘special’ than we were in 2015. With the absence of a typhoon, we became aware of the crisis and embarked on responsive measures and negotiations to prevent the water shortage at an early stage. last July – months before the start of a traditional dry season, “Lai Chien-hsin, the group ‘s general manager, told Nikkei Asia.
Su Chen-kang, chief executive of Southern Taiwan Science Park, told Nikkei Asia that the technology and manufacturing sectors were very vigilant, with message communication groups “to ensure all companies have the right messages about water supply so that they can come up with better strategies and plans to combat the shortage “.
To keep the tech manufacturing sector going, Tsai Ing-wen administration on February 1 started using a new water pipeline to draw water from Taoyuan to support Hsinchu. The government at the end of 2020 also agreed an emergency plan to build an incineration plant in less than 70 days to provide more water to Hsinchu. The plant came online Tuesday.
“Climate change is dynamic and we must always think ahead for the worst. The government has been preparing for this and trying to increase supply since last year but we also need not just the suppliers but everyone in the country to help conserve water, as resources are limited and valuable, “said Lai.