Chips produced by TSMC
British Semiconductor
World semiconductor powerhouse Taiwan is facing a power shortage that could spell trouble for chipmakers.
Manufacturing wafers requires large amounts of energy and electricity, and the government is working hard to meet the island’s energy needs.
“Concerns about potential power shortages and deterioration in power quality and reliability may bring operational risks to the semiconductor industry,” Chen Zongshun, an assistant researcher at the China Economic Research Institute, told CNBC.
have Three major power outages In the past seven years, Taiwan has experienced A series of smaller disruptions occurred last year.
As recently as April, only in northern Taiwan, Multiple power shortages were recorded More than three days, according to local reports.
2022, 313 power outages occurred. a big one There was a power outage that year Affecting more than 5 million households, at the same time Another massive power outage occurred in 2017 Nearly 7 million households were affected.
“Taiwan faces an energy shortage and more importantly an electricity shortage,” said Joseph Webster, senior fellow at the Atlantic Council’s Global Energy Center.
power crunch
Taiwan relies on imports for more than 97% of its energy needs, mainly from coal and natural gas. Experts told CNBC that heavy dependence on other countries makes the islands vulnerable to disruptions in energy supplies.
Webster added that while the blackouts were partly due to an aging grid, the power crunch was largely caused by low electricity prices in Taiwan, which drove up demand and led to supply shortages.
although Taiwan recently increased electricity prices for large industrial users by 15%the household consumption rate remained unchanged.
Today’s electricity bill is Cheaper than 20 years agoAccording to Taiwan’s Ministry of Economic Affairs. At the same time, global commodity prices surged.
therefore, Taiwan Electric Power Company (Taipower) has been losing money. The state-owned company reported a pre-tax loss of $6.3 billion in 2023, with an even larger loss in 2022.
“Taipower has been losing money, which has also raised concerns about potential power outages in the semiconductor industry and Taiwan’s overall economy,” said Michelle Brophy, research director at market intelligence platform AlphaSense.
Brophy said that on the one hand, as electricity prices rise for semiconductor companies, higher costs are expected to be passed on to consumers.
Chip giant British Semiconductor It has been revealed that the cost increase will be passed on to customers to protect the company’s profit margins.
Impact on the chip industry
Taiwan’s industrial consumers will account for more than 55% of its electricity consumption by 2023, according to the Atlantic Council’s Webster. These consumers, including semiconductor companies, often require a continuous and reliable supply of electricity.
“If Taiwan is forced to implement power rationing more frequently in the future due to limited supply, Taiwan’s semiconductor companies will suffer,” he added.
Webster said any energy disruption would slow down wafer manufacturing and raise global semiconductor prices.
“Taiwan’s power shortage could have an impact on the global semiconductor market,” he said, adding that power outages could affect the entire global industry.
TSMC is the world’s largest advanced chip manufacturer, accounting for approximately Accounting for 60% of global OEM revenue. The company is an integral part of the ongoing development The Generative Artificial Intelligence Boomand counts tech giants like apple and Nvidia as a customer.
The global semiconductor manufacturing market size revenue is expected to double by 2030, when 237 terawatt hours (TWh) of electricity will be consumed. A Greenpeace report states.
If Taiwan is forced to implement power rationing more frequently in the future due to limited supply, its semiconductor companies will suffer.
joseph webster
Atlantic Council Global Energy Center
The same report also found that electricity consumption in Taiwan’s semiconductor manufacturing industry is expected to increase by 236% between 2021 and 2030.
“The speed and scale of power demand from artificial intelligence data centers has surprised the global power industry,” Webster said, adding that Taiwan’s future power consumption faces “considerable uncertainty.”
Chen from Chung Hwa College said the Taiwanese government plans power supply based on the needs of several large companies.
Still, meeting Taiwan’s energy needs remains a daunting task.
“Taiwan has struggled to achieve its power infrastructure goals due to land constraints, overly ambitious and rigid policies, and a lack of understanding and ability to address power shortages,” Chen added.
This further raises corporate concerns about the reliability of future power supply commitments from big technology companies.
“Electricity is an ongoing issue for the industry,” Brophy said, especially because of Taiwan’s outsized influence on the semiconductor industry.
About The Author
