Taiwan earthquake tests readiness of world’s chip-making hub

TSMC said initial inspections following Wednesday’s earthquake found safety systems at its facilities in Taiwan were operating normally. PHOTO: BLOOMBERG NEWS
TSMC said initial inspections following Wednesday’s earthquake found safety systems at its facilities in Taiwan were operating normally. PHOTO: BLOOMBERG NEWS

Summary

TSMC, which makes chips for customers such as Apple, has prepared for years for a quake.

The world’s most important semiconductor-manufacturing hub is also one of the world’s biggest earthquake hot spots, and it was put to the test Wednesday after a powerful quake.

Taiwan Semiconductor Manufacturing—which makes chips for customers such as Apple and occupies a critical place in the global electronics supply chain—has prepared for years for a quake, drawing on lessons from a 2011 disaster in Japan among others.

TSMC briefly evacuated some of its locations Wednesday and suspended work at some plants after an estimated 7.4-magnitude quake struck eastern Taiwan. It said initial inspections found safety systems were operating normally and no one was hurt.

Information wasn’t immediately available about any possible damage to equipment or monetary losses from the work suspensions.

TSMC was fortunate in this instance because its main facilities are located near the capital of Taipei in the north and in other areas in the middle and southern parts of Taiwan that are relatively distant from the epicenter on the eastern side of the island.

On a 7-point scale often used in Asia to show how much shaking an earthquake caused, the shaking level in parts of Taiwan near the epicenter was 6-plus—near the maximum—while at TSMC’s Hsinchu Science Park headquarters near Taipei, the highest level recorded was 5-minus. That figure is usually associated with minor or no damage to buildings.

Still, the delicacy of the equipment and materials used to make semiconductors means that even if a building is intact, less-visible damage is possible.

The silicon wafers used in semiconductor manufacturing, thin slices roughly the size of a large pizza, require precise handling and controlled environments. The slightest imperfection could force them to be discarded.

Also, even a brief shutdown could have larger effects on production and cost tens of millions of dollars because of the time and work needed to restart.

TSMC and its fellow chip makers are well aware of the vulnerabilities. On its website, TSMC says it learned lessons when many Japanese companies found their emergency plans weren’t up to the task in the 2011 earthquake and tsunami in northeastern Japan. It also learned from a 1999 quake in Taiwan.

TSMC says it added dampers to buildings to absorb earthquakes’ energy and has been conducting regular drills aimed at reducing property losses and getting operations back up more quickly.

The company also says its earthquake insurance is sufficient “to distribute business losses under the worst possible conditions." A spokeswoman said TSMC’s buildings are designed to withstand earthquakes whose magnitude is on a par with Wednesday’s quake.

According to internal emergency guidelines used by TSMC, earthquake shaking measured at level four on the 7-level scale triggers evacuation from clean rooms, the most sensitive part of the facility. The guidelines call for a complete site evacuation in the event of a level-5 quake as well as shutdown procedures for gas and chemical systems to prevent toxic leaks.

TSMC’s production delays likely range from six to 10 hours, Counterpoint Research estimated.

The Hsinchu Science Park and the region around it are the hub for Taiwan’s manufacturing industry, hosting factories that make, package and test semiconductors as well as makers of displays used in computers and other devices. TSMC also operates a plant in Tainan in the south, mass-producing the most advanced semiconductors.

TSMC said those who were evacuated in the morning returned to work later in the day. It said some work was suspended for the day without giving specifics. Other companies also said they evacuated workers and pre-emptively shut down some equipment for further inspection.

Write to Yang Jie at jie.yang@wsj.com

Taiwan Earthquake Tests Readiness of World’s Chip-Making Hub
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Taiwan Earthquake Tests Readiness of World’s Chip-Making Hub
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