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Taiwan power shortage could cripple chip foundries

Posted: 09 Jul 2015 ?? ?Print Version ?Bookmark and Share

Keywords:power supply? chip foundry? electricity?

The world's largest chip foundry recently appealed to its government to solve a pressing issue that could affect not just the company but the semiconductor industry as a whole.

Taiwan Semiconductor Manufacturing Co. (TSMC) pressed the Taiwan government to solve a long-term power supply in the country, which could land a serious blow to TSMC as soon as five years from now.

"TSMC cannot be without power for even a minute," Chairman Morris Chang said in comments to the press last week.

Chang's comments come as Taiwan's government-run power monopoly, Taiwan Power Co., announced that it may soon start rationing electricity during peak demand periods this summer. Taipower said it will inform companies that consume more than 1,000W of electricity per day nearly 24 hours in advance of possible power restrictions.

TSMC has sufficient onsite supplies of power to meet its current needs in the event of any immediate electricity shortages, TSMC Director of Corporate Communications Elizabeth Sun said to EE Times. Yet TSMC may be impacted within five to 10 years if Taiwan fails to solve the longer-term issue of power supply on the island, she said.

"We need an environment with a stable supply of electricity," she said. "The government hasn't informed us of its long-term plans."

Should the government fail to act, TSMC might lose its standing in the global chip market. Data compiled recently by Semico Research show TSMC as second only to South Korean giant Samsung, surpassing Intel, in its forecast capital expenditure for this year despite the Taiwan-based foundry's announced $1-billion capex cut to about $10.8 billion.

Taiwan, which includes chipmakers such as number two-ranked foundry United Microelectronics Corp., accounts for about a fifth of the world's chip output. Yet the island's chipmakers are challenged by earthquakes, droughts and shortages of electricity, all of which have interrupted production at various times during the past two decades.

Last April, Taiwan reduced water supply to some companies by up to 10 per cent. The island's rainfall from October through March is the lowest since 1947 when the government started keeping records. The Water Resource Agency forecasted a "high likelihood" of drier weather in the next three months.

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