Chipmakers in drought-hit Taiwan order water trucks to prepare for 'the worst'

Chipmakers in drought-hit Taiwan order water trucks to prepare for 'the worst'

Chipmakers in drought-hit Taiwan order water trucks to prepare for 'the worst'

TAIPEI (Reuters) – Taiwan chipmakers are buying water by the truckload for some of their foundries as the island widens restrictions on water supply amid a drought that could exacerbate a chip supply crunch for the global auto industry.

FILE PHOTO: The logo of Taiwan Semiconductor Manufacturing Co (TSMC) is pictured at its headquarters, in Hsinchu, Taiwan, January 19, 2021. REUTERS/Ann Wang/File Photo

Some auto makers have already been forced to trim production, and Taiwan had received requests for help to bridge the shortage of auto chips from countries including the United States and Germany.

Taiwan, a key hub in the global technology supply chain for giants such as Apple Inc, will begin on Thursday to further reduce water supply for factories in central and southern cities where major science parks are located.

Water levels in several reservoirs in the island’s central and southern region stand at below 20%, following months of scant rainfall and a rare typhoon-free summer.

“We have planned for the worst,” Taiwan Economy Minister Wang Mei-hua told reporters on Tuesday. “We hope companies can reduce water usage by 7% to 11%.”

With limited rainfall forecast for the months ahead, Taiwan Water Corporation this week said the island has entered the “toughest moment”.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, this week started ordering small amounts of water by the truckload to supply some of its facilities across the island.

“We are making preparations for our future water demand,” TSMC told Reuters, describing the move as a “pressure test”. The chip giant said it has seen no impact on production. Both Vanguard International Semiconductor Corporation and United Microelectronics Corp signed contracts with water trucks and said there was no impact on production.

Vanguard said it has started a drill to truck water to its facilities in the northern city of Hsinchu.

Taiwanese technology companies have long complained about a chronic water shortage, which became more acute after factories expanded production following a Sino-U.S. trade war.

Reporting By Yimou Lee; additional reporting by Jeanny Kao; Editing by Simon Cameron-Moore