TSMC Plant Hit By Power Outage – Millions Of Dollars In Damage Expected

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The Taiwan Semiconductor Manufacturing Company's (TSMC) chip fabrication plant in the province's Tainan sector experienced a power outage earlier today. This facility is responsible for fabricating semiconductors on the 12nm and higher process nodes, with its output primarily used to supply chips destined for automotive uses. It comes as the global automotive industry is dealing with a semiconductor supply crisis, and initial, unofficial estimates suggest that the damage could amount to millions of NT$.

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The outage took place at 11:06 local time as a plant under construction by Qi Qi Construction Co. Ltd. in the Nan-Ke subsector of the Tainan cut a 161kV power cable belonging to Taipower. TSMC operates its Fab 14 in Nan-Ke, and as a result, this facility's power supply experiences significant voltage drops.

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Following the outage, the power supply was not restored until 18:23, and in the meantime, TSMC switched power to its backup diesel generators, believe reports from United Daily News. The fab also clarified that there were no safety concerns to its workers due to the outage and that no person had to be evacuated as a result. The fab is now receiving power from a backup power line, and Taipower expects repairs to be finished by 17:00 local time tomorrow.

Due to the outage, Taiwanese industry sources expect that the damage to TSMC's output can reach millions of NT$. While the company is yet to officially provide an update about the damage, with one expected tomorrow as TSMC evaluates the situation, up to 30,000 wafers are expected to be impacted due to the power breakdown.

The P7 plant in the 14B factory in the center of the outbreak is believed to have a monthly production capacity of 40,000. Judging by this, the 30,000 wafer loss estimate seems to be exaggerated. Therefore, it should not be taken as set in stone unless further details on the matter come to light.

Entrance of TSMC's Fab 14B, which was at the center of today's outage. Image: EPA/Jiji

Using TSMC's revenue-per-wafer estimates and deriving a range from unofficial wafer damage reports allows us to speculate the company's monetary damage. TSMC is believed to earn an average of $1,624 per wafer and assuming that a minimum of 1000 wafers were lost or rendered unusable due to the outage results in a revenue loss of roughly $1.6 million.

Delving a bit deeper and using an older estimate from IBS reveals that a 16nm wafer price is $5,912. This increases the cost of today's loss even at a low-end estimate of 1,000 wafers fivefold from our earlier estimates. When determining material loss to TSMC, the wafer price is a more accurate estimate as it provides the costs that the company has already incurred during the production process, whereas wafer revenue is the amount that the fab expects to earn.

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The 16nm wafer price, coupled with a high-end loss estimate of NT$700 million, reveals that TSMC might have lost up to 4,200 wafers. As has been cautioned above, all these estimates are preliminary, and the only figures which should be relied upon are those that TSMC officially reveals.

Whether the ongoing automobile chip shortage will worsen following today's outage is uncertain and depends on how long TSMC will take to ramp up operations. The limited information out there right now suggests that the power supply has been restored, but there is no information yet on the capacity utilization levels of the P7 line.

The Taiwanese fab is already believed to be conducting a Super Hot production run to ease the automobile chip crisis. This run is already thought to have increased TSMC's costs. The company has canceled customer discounts for this year as it faces additional demand from the consumer electronics sector in the wake of the ongoing pandemic creating a demand upsurge due to remote working and entertainment.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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