FUSION: MARKET INTELLIGENCE
Earthquake Impacts Semiconductor Manufacturers in Taiwan
On April 3, 2024, a 7.2-magnitude earthquake struck eastern Taiwan before 8:00 a.m. local time. This was the strongest earthquake to hit Taiwan in 25 years, leading to evacuations of numerous buildings that were in danger of collapsing.
Taiwan is central in end wafer production and backend assembly and testing processes, producing over 60% of the world’s semiconductors and 90% of advanced chips. Estimates indicate that the halt in production was largely temporary, and production was only minimally impacted. While the overall effect of the earthquake on the semiconductor supply chain is limited, certain commodity groups will experience pockets of constrained availability. The extent of this trend will depend on customer’s buffer stock levels.
Manufacturers in the memory supply chain swiftly implemented proactive measures to mitigate the disruption caused by the earthquake. As this occurred at the beginning of the quarter, pricing for components was either in negotiation or recently updated. Forecasts now suggest that pricing for memory products will rise by as much as 20% as manufacturers anticipate a surge in demand post-earthquake.
In response to the anticipated disruption, most companies in the area temporarily halted their quotes while shipments were on hold. DRAM production experienced a significant pause, and LPDDR was also affected. Given the pre-existing trend of increasing DRAM costs, customers can expect spot prices to rise further in the coming weeks.
The impact on DRAM pricing and availability is expected to have a ripple effect on the GPU market, especially considering the supply bottleneck that was already an issue for Nvidia products.
The table below provides details on the impact on manufacturers with facilities in the area. The information reflects the latest market intelligence reports as of the week of April 8th, 2024.
|
Manufacturer |
Impact |
|
AMD |
While AMD is reportedly less affected by the earthquake, wafer foundry manufacturers evacuated to assess the facility's threat level. |
|
Gemtek |
The loss of power at Gemtek, a telecommunications supplier, may interrupt operations. |
|
Macronix |
Macronix has advised customers to expect at least 12 -16 week lead times for orders. This announcement is based on future demand forecasts. |
|
Micron |
Micron quotes were still paused as of April 9th. DRAM is reportedly the most impacted product, but production is expected to fully recover, with subsequent production for HBM set to continue within Taiwan.
While HBM production lines were reportedly operational immediately following the earthquake, supply of GPUs and DDR6 may have been affected. In response, Micron has restarted quarterly price negotiations and will finalize costs after the company completes a thorough loss assessment.
In the past, costs have increased by 50% after unexpected disruption events, but it remains to be seen how the company will adjust costs alongside current demand trends. |
|
NANYA |
NANYA distributors are pausing quotes because production lines have been temporarily shut down for inspection. These lines are mainly for EUV processes, and production may take time to resume. |
|
Realtek |
Realtek has notified customers that the earthquake will delay delivery, and customers should brace for shortages. |
|
Samsung |
Distributors anticipated Samsung costs would increase this quarter, with early market reports indicating that DRAM prices would increase by 40%. However, official pricing was not yet released when the earthquake hit, so Samsung is pausing price negotiations and shipments until further notice to assess the impact on supply and demand. |
|
SK Hynix |
SK Hynix temporarily stopped quoting to assess the full impact of the event on their operations and market outlook. At this time the company is reportedly unable to support quoted lead times for 64GD DDR5, which were originally in the range of four weeks. There has been no official statement on price increases, but DRAM prices are expected to rise as a result of this event as the company is not currently committing to pricing or lead times. |
|
Taiwan Semiconductor Manufacturing Co. (TSMC) |
Since the initial impact of the earthquake, TSMC has stated that most of its equipment is back online, but the production lines are not yet up to 100% capacity. TSMC’s foundry facilities in Hsinchu/Miaoli, Taichung, and Tianan were reportedly impacted, with the Hsinchu plant pausing production for at least 24 hours. |
|
United Microelectronics Corporation (UMC) |
Staff at UMC’s Hsinchu and Tainan plants were evacuated according to operational standards, and the on-site personnel are reportedly safe. |
|
Winbond |
Winbond distributors were reportedly holding quotes until an impact evaluation could be completed at the company’s Taichung and Kaohsiung plants. As of April 8th, production allegedly resumed. |
Fusion Worldwide’s global team is committed to informing our customers of the latest market developments as they unfold. The weather event also triggered tsunami advisories for Japan and the Philippines.
We will continue to monitor the situation in Taiwan, Japan, and the Philippines.
Contact us today to learn more about Fusion Worldwide’s rapid response to get Out in Front of supply chain risks.