AMD Stock – Taiwan Drought Threatens to Hurt Production of Chips
Semiconductor manufacturing requires some of the world’s most advanced technology to print tiny transistors onto silicon discs known as wafers. But chip manufacturing also requires a decidedly low-tech ingredient: water.
Taiwan, home to several important chip manufacturers including
Taiwan Semiconductor Manufacturing
(ticker: TSM), is suffering from one of the worst droughts in decades. If it continues, it could further threaten the already stretched semiconductor supply.
According to its latest social responsibility report, Taiwan Semi needs roughly 156,000 metric tons of water every day for its production facilities on the island. The company takes a number of measures to recycle water and uses other techniques to reduce the amount needed for each chip. In 2019, the company recycled 133.7 million metric tons of water, or about 87% of its total use.
Beyond recycling and reduction, a Taiwan Semi spokeswoman told Nikkei Asia the company started to use trucks to obtain more water for its manufacturing operations. “Deployments are still limited and the main purpose is to get the involved staff prepared for possible future needs,” the spokeswoman told Nikkei Asia. The company didn’t immediately return Barron’s request for comment.
Taiwanese officials said earlier this week that the island would have sufficient reserves of water to keep Taiwan Semi up and running through late May. Typically, Taiwan’s rainy season runs from March to May and is followed by the typhoon season which lasts from June to August. The Taiwanese government issued water restrictions last month for industrial uses.
Taiwan issued a water restriction on industrial companies in 2015 because of a severe drought. Then, the total rainfall between October and March of that year was the lowest since record keeping began in 1947, The Wall Street Journal reported at the time. This drought is more concerning, however, because no typhoons hit the island in 2020.
Chip stocks were mixed in Wednesday trading. The
PHLX Semiconductor index,
or Sox, fell 1.3% in afternoon trading.
U.S.-traded shares of Taiwan Semiconductor Manufacturing, which makes chips for the likes of
Advanced Micro Devices (AMD)
and Apple’s iPhone and Mac processors, fell 1.8% to $114.24.
(INTC), which in some ways is a rival to Taiwan Semi, fell 0.2% to $62.51.
Early Wednesday Taiwan Semi reported February sales of NT$106.53 billion ($3.76 billion), a decrease of 15% compared with January, but a 14% rise compared with February a year ago.
Write to Max A. Cherney at [email protected]