Taiwan Quake Rocks AI Chip Hub, Threatens Global Supply

A powerful 7.4-magnitude earthquake hit the east coast of Taiwan, disrupting production at major semiconductor manufacturers and threatening the global electronics supply chain, Bloomberg reports. 

Taiwan is the world’s number one producer of advanced chips, used to power large language models (LLMs) and other artificial intelligence apps by the likes of OpenAI, Microsoft and Google.

Also read: OpenAI’s $100bn Bid to Challenge Nvidia, TSMC in Chip Arena 

AI chip makers halt production

The earthquake, Taiwan’s biggest in 25 years, struck the eastern county of Hualien on Wednesday, and left more than 1,000 people injured and at least 10 dead, according to several media reports. On Friday, rescuers were still looking for 18 people missing.

After the disaster, major chipmakers in Taiwan scrambled to take stock of the damage. TSMC, the main contract supplier of chips to Apple and Nvidia Corp., evacuated its staff from certain areas and is examining the quake’s impact on production, per Bloomberg.

TSMC’s main facilities near Taipei, far from the epicenter, didn’t see much shaking, limiting damage. Rival United Microelectronics Corp., also stopped operations at some plants and moved staff from its main production facilities in Hsinchu and Tainan.

Taiwan Semiconductor Manufacturing Co. (TSMC) staff have now resumed work at evacuated sites after “initial checks showed that safety systems” at the earthquake-hit semiconductor fabrication machinery were “operating normally,” according to Reuters.

The company said operations got disrupted by the damage caused “to a small number of tools at certain facilities,” but it didn’t include key chip-making devices such as its extreme ultraviolet lithography tools, which reportedly cost more than $150 million.

Some production lines in areas that experienced the greatest impact from the quake “were likely to take more time to return to fully automated production,” TSMC said, as reported by Reuters.

Averting disaster

The news that TSMC has restarted production at its Taiwan-based factories will likely be received with a sense of relief within the AI industry throughout the world.

There were fears that disruptions at TSMC and UMC could lead to a global shortage of chip supply, especially the most sophisticated semiconductors, which need uninterrupted production processes.

TSMC‘s semiconductors are at the heart of modern technology, powering everything from iPhones to Nvidia’s graphics processing chips, which are used to train AI models like ChatGPT or Gemini.

Taiwan provides 80% – 90% of the world’s most advanced chips needss, according to some estimates, meaning any disruption to the island’s chip making could have major repercussions for the global tech and artificial intelligence industry.

This concentrated supply chain is one of the key reasons that heavy users of semiconductors, including Microsoft and OpenAI, plan to making their own AI chips, as MetaNews previously reported.

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• Source: https://metanews.com/taiwan-quake-disrupts-major-ai-chip-hub-threatening-global-supply/