Taiwan’s earthquake heightens need for resilient global supply chains
Semiconductor industry has responded fairly well to 7.4-magnitude earthquake, but companies should reach out to potentially affected suppliers.
Taiwan’s massive 7.4 magnitude earthquake raised considerable concerns of supply chain impacts to global high-tech and semiconductor supply chains and relevant sub-tier suppliers directly impacted. Resilinc data shows that over 13,000 sites, 21,000 products, and 58,000 parts could be affected.
The deadly earthquake provides significant indication to just how globally interconnected and risk-exposed global supply chains are. The importance of effective, proactive predictive supply chain capabilities is paramount to better detect and respond to disruptive events like this.
On Wednesday morning, Taiwan’s east coast experienced the largest earthquake in 25 years. Followed by 76 aftershocks, the staggering quake was felt in parts of China, even triggering tsunami warnings for Taiwan, Japan, and the Philippines. While tsunami warnings have been lifted, the damages to Taiwan and its critical high-tech supply chain remain.
In the aftermath, 26 buildings collapsed, 24 landslides were triggered and approximately 308,000 power outages have been documented in Taiwan. As of now, nine people are dead, and at least 934 were injured, according to Taiwan’s Fire Department.
Global semiconductor supply chain
Right now, semiconductor companies in Taiwan are managing operations and impacts fairly well. Some have temporarily suspended operations, some are experiencing partial shutdowns and site evacuations, and others continue to operate as usual, conducting inspections to ensure employee safety.
TSMC—which manufactures 90% of the world’s most advanced chips that power iPhones, artificial intelligence (AI), electric vehicles, and fighter jets—has taken the first option. TSMC announced that although initial inspections showed normal conditions at its construction sites, it decided to suspend work for the day. Operations will recommence after further inspections.
Several semiconductor manufacturers have evacuated facilities, such as KYEC and Damai Technology, while other companies like Power Semiconductor Manufacturing Co. and United Microelectronics Corporation (UMC) have temporarily suspended operations to conduct safety checks. Some companies like AUO and Macronix have seen operations continue as usual.
Low-tier items like semiconductor components, such as silicon wafers, may experience disruptions five-tiers deep in the supply chain. Companies responsible for those components may realize they cannot resolve those issues, which are then passed up to the supplier at the third tier. As a result, companies that have not proactively mapped out supply chain dependencies, can be potentially impacted weeks or months from now as those ripples of disruption flow up to them.
What comes next for supply chains?
Experts predict continued aftershocks in the next week, and companies should assess their supply chains now and communicate actively with potentially impacted suppliers. As Taiwan works to restore damaged buildings, blocked roadways, and power, there may be delays and gaps in the supply chain.
To effectively respond to disruptive events like this, companies need to proactively understand where materials are manufactured, distributed, and stored in warehouses. Companies that have proactively mapped out where they get parts and products and supplies from, can access and secure necessary inventories faster than other companies. Public information—like locations of business offices—doesn’t provide the level of detail necessary to inform meaningful risk management when crises like the Taiwan earthquake strike. Vendors must actively communicate with upstream buyers who quickly understand if there is a confirmed impact, no impact, or recovery. Direct communications like this are tough during a time of crisis. Thus, establishing a direct line of communication proactively in advance of a disruption is vital.
