Officials survey the damage in Hualien in Taiwan. Source Al Jazeera.
Experts say that the electronic stocks will be only slightly affected by Taiwan’s Earthquake.
There were seismic terrors, recently experienced in Taiwan. As it happened, the global electronics industry held its breath. Everyone anticipated disruptions in the intricate supply chain network fueling the operations.
A very impactful 7.4 magnitude earthquake struck the island nation, rattling the Taiwan Semiconductor Manufacturing Co. (TSMC). The plant was forced to halt its crucial option.
However, the good news is, there was a remarkable display of efficiency and display. Within less than 10 hours, the staggering 80 percent machinery of TSMC was back to functional. This hardly affected the stock market at all. More than that, it shows the robustness of Taiwan’s industrial infrastructure.
As the tremors settled with the initial chaos being subsided, a relief swept through the Indian electronics ecosystem. Everyone’s assessments indicate that there are minimal disruptions and no major ones to the supply chain connecting the two nations. This is a relief for millions.
Taiwan Earthquake- What do experts say
Despite dictated relief, industry experts maintain a cautious stance. Many of them are adopting a “wait and watch” approach as they inspect the aftermath of the massive earthquake. The immediate production problems have been mitigated. However, the full extent of the disruptions’ effect is yet to be seen. This has prompted stakeholders to be vigilant in assessing and then adapting to this unique evolving situation.
Why Taiwan is Important
Taiwan is a major global player in the production of high-end chips, accounting for 80-90 percent of the market. TSMC is the largest chip maker globally, specializing in advanced chip production for industry leaders like Apple and Nvidia. Shortly after the island was hit by its most powerful earthquake in 25 years, which led to tsunami warnings, the chip maker had no choice but to evacuate its employees. The factory quickly resumed production in less than 10 hours, by Wednesday night. By Thursday morning, employees were given permission to resume their work on the factory floor.
Learn more about TSMC resuming operations here.
Reports by TSMc officials
According to initial reports from TSMC, there seems to be very little damage to their machinery. They have stated that their critical tools, including all of their extreme ultraviolet lithography tools, have not been affected. Therefore, the Indian electronics sector will experience little to no disruption.
Image Source – Asia Times
Tarun Pathak, director, of Counterpoint Research stated that there could be a slight to possibly significant effect on chip production capacity, depending on the final evaluation of the damage. This may result in a slight delay of about a week or so, but considering it is a slow season, the overall impact would be minimal. We are aware that TSMC is currently undergoing inspections to evaluate the overall impact on its facilities.
According to Navkendar Singh, Associate Vice President at IDC India, any potential supply chain impact may not be immediately noticeable, as major electronics companies typically place orders several quarters in advance. If this disruption were to last for more than a week, we could anticipate significant supply chain disruptions due to potential aftershocks and other factors. Currently, Singh has indicated that the impact on the supply chain is minimal.
Several smartphone and laptop manufacturers that businessline interviewed expressed little concern about factory disruptions at TSMC. A representative from a leading smartphone brand mentioned to businessline that they are currently not observing any immediate consequences. Nevertheless, chip manufacturers still need to provide their customers with updates regarding the potential impact.
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