Massive 7.4-magnitude earthquake strikes Taiwan, threatens tech supply chain

In brief: A 7.4-magnitude earthquake that struck Taiwan on Wednesday morning (8 pm Tuesday Eastern Time) has claimed nine lives as of writing, injured hundreds others, and threatens to disrupt the tech supply chain.

According to NBC News, the quake hit roughly 11 miles south-southwest of Hualien at a depth of about 21 miles, and triggered tsunami warnings for Taiwan, Japan, and the Philippines that were eventually lifted.

Bloomberg said some local chipmakers, including market leader Taiwan Semiconductor Manufacturing Co., have halted operations. The company told the publication it has moved staff out of specific areas and is assessing the situation.

United Microelectronics Corporation, another chipmaker in the region, said the quake triggered automatic safety measures at fabs in Hsinchu and Tainan that affected some wafers on the production line. All staff are safe, however, and there was no material impact on the company’s operations. As such, business and shipments are resuming as normal, UMC said.

WATCH: Strong earthquake causes landslide in eastern Taiwan pic.twitter.com/SQZFyd7zgj

– BNO News (@BNONews) April 3, 2024

TSMC is the leading contract manufacturer for some of the world’s largest tech companies including Apple and Nvidia. Disrupting a key cog in the supply chain could have a sort of trickle-down effect.

Bum Ki Son and Brian Tan, analysts with Barclays, said some high-end chips require seamless 24/7 operations in a vacuum state for weeks at a time. Halting operations could potentially ruin chips that are midway through the production process.

It is too early to know for sure, but most don’t believe the quake will totally derail the tech supply chain like we’ve seen with other major events.

Unlike Covid where everything worldwide came to a sudden stop, Taiwan is only one part of the tech supply chain, and it does not sound like infrastructure was totally wiped out like we saw with the devastating floods in Thailand in 2011 that caused hard drive prices to soar.

In the case of TSMC, analysts with Bloomberg Intelligence suspect demand for its advanced process nodes should cushion any sort of short-term financial impact.

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