TSMC’s Advanced Chip Plants Might See Additional Water Restrictions As Taiwan Drought Worsens

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The Taiwan Semiconductor Manufacturing Company (TSMC) has increased its water tanker supplies, according to a report by the Taiwanese media outlet United Daily News (UDN). These measures come as water levels in Taiwan's Hsinchu sector continue to drop, and the island's sectors set to tighten usage restrictions for industrial users in Taiwan's science and industry parks. UDN reports that TSMC will increase its order of water tankers for the company's fabrication facilities in Hsinchu Science Park. Taiwan's Hsinchu sector is currently on an Orange alert, which cut down industrial users' usage by 11% in February this year.

TSMC Increases Water Tanker Supplies As Several Taiwanese Sector Tighten Industrial Water Conservational Percentage

While several of TSMC's chip fabrication plants and lines are in the Hsinchu science and industrial park, the ones primarily responsible for the leading-edge 5nm and 7nm process node located in other sectors. They accounted for roughly half of TSMC's revenue in its latest quarters, showing the rapid growth and a market share which eclipses that of all older process nodes.

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TSMC's decision of increasing water tanker supplies to its Hsinchu lines is unsurprising as most water reservoirs located inside Hsinchu now have less than a month's worth water supply left. Their water levels have fallen despite new regulations that required industrial users to reduce water consumption by 11% earlier this year in February.

Water levels in Hsinchu's Baoshan first and second reservoirs stood 30% and 15% in February, and since then have dropped to 9.2% and 3.7%, respectively. As a result, Taiwan's Ministry of Economic Affairs believes that the pair have roughly two months of water supply remaining.

However, for the other two reservoirs, which supply water to Hsinchu and New Taipei, Miaoli and Taoyuan, the situation has severely worsened. The Shinmen reservoir responsible for supplies to Hsinchu, New Taipei and Taoyuan, has 21 days of water supplies left -  a relatively optimistic estimate compared to the water levels in the Yongheshan reservoir. This reservoir is responsible for supplies to Hsinchu and Miaoli, and it can currently support supplies for only two weeks.

Water Levels In Reservoirs Responsible For Supplying 5nm Plants Tether Between Adequate and Dangerously Low

TSMC's facilities burdened with 5nm and 7nm production are located in the Tainan and Taichung districts. According to today's report, both the districts will also be required to implement tighter measures. Specifically,  Industrial users who use more electricity than 1,000kW will reduce their water consumption in Tainan, and water supplies in Taichung will now be cut off for eight hours.

Two of the three reservoirs responsible for supplying water to Taichung are in an equally worst position as the Hsinchu reservoirs. The Liyutan and Deji dams, the biggest of the three reservoirs for the sector, are at 2.6% and 1.8% of their capacity and can supply water for a month for the former and nine days for the latter. On the other hand, with a total capacity of less than a quarter of the Deji dam, the third reservoir has 137,000 cubic meters of water left.

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TSMC's latest chip fabrication plants that churn out 5nm products are in Tainan, which is better off than the other sectors regarding water reservoir capacity. Tainan's biggest dam, the Wushantou reservoir, has supplies of up to two months remaining. However, two of the sector's four reservoirs are empty, and unless the situation improves, industrial users in the area might be required to curtail their water consumption.

What impact the possible tightening of the water conservation policy has on TSMC's production is uncertain at the moment and depends on its ability to secure adequate water to meet potential shortfalls.

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