'Gangjin Damage' TSMC Equipment 70% Recovered... Memory Prices Expected to Rise in Q2

Partial Damage from Taiwan 7.3 Earthquake
"Production to Resume Soon"

DRAM Prices Expected to Rise Double Digits in Q2

TSMC in Taiwan, which halted some production lines due to a magnitude 7.3 earthquake, announced that it will soon resume production. The company stated that key equipment, including extreme ultraviolet (EUV) lithography machines, was not damaged. While the impact on the global semiconductor supply chain is expected to be limited, there are forecasts that memory prices could fluctuate in the second quarter.

According to Taiwan's Central News Agency and China's economic media Caixin on the 4th, TSMC said it will restart semiconductor production lines that were suspended the previous day due to the magnitude 7.3 earthquake. The company explained, "We are supporting efforts to accelerate a full resumption of operations and will maintain close communication with our customers."

TSMC reported that within 10 hours of the earthquake, the equipment recovery rate exceeded 70%, and the recovery rate for newly built wafer fabs (such as Fab 18) surpassed 80%.

The company emphasized that although some equipment was damaged affecting production lines, there was no damage to the EUV lithography equipment essential for advanced semiconductor manufacturing. Fab 18 applies ultra-fine process technologies of 3 nanometers (nm; one billionth of a meter) and 5 nanometers, and recently expanded production facilities on nearby land.

TSMC factory in Taiwan.
Photo by Yonhap News

Employees who were evacuated are also returning. TSMC issued an evacuation order to some production line staff immediately after the earthquake on the 3rd. TSMC stated, "All employees are safe and returned to the workplace immediately after the incident," adding, "We are currently assessing the impact of the earthquake."

Since TSMC's factories in Taiwan are mainly located in the western region, the impact from this earthquake, which occurred in the northeast, is expected to be limited.

However, some damage to semiconductor chip production is inevitable. A local source familiar with TSMC told Taiwan's Digitimes, "We witnessed structural damage to the N3 wafer fab caused by the earthquake, and production lines were halted," adding, "All EUV equipment was stopped, and cracks were observed in the walls of the research and development (R&D) laboratory." Another TSMC factory located in the Hsinchu Science Park also suffered damage such as pipe ruptures, leading to production suspension.

Taiwan's Commercial Times also estimated that TSMC suffered losses of about $60 million (approximately 8.09 billion KRW) due to quartz tube damage in some factories caused by the earthquake, which damaged wafers. Due to the sensitive nature of semiconductor manufacturing processes, even minor environmental changes require discarding materials used in the production line after a brief shutdown.

Taiwan is a global center for wafer manufacturing, accounting for 46% of the world's wafer foundry production capacity last year. Particularly, its market share reaches 68% based on production capacity in advanced processes (14/16 nanometers and high-end processes). Top ten foundry companies such as TSMC, UMC, Power Semiconductor, and AMD are located in Taiwan. As of the fourth quarter of last year, their market shares were 61.2%, 5.4%, 1.0%, and 1.0%, respectively.

Some fluctuations in memory prices are also expected due to the earthquake. Peter Lee, a Citi analyst, noted in an analysis report that Taiwan accounts for about 15% of the global DRAM semiconductor supply capacity, and the earthquake's aftermath could lead semiconductor manufacturers to raise prices during negotiations. Lee predicted, "DRAM prices in the second quarter will record double-digit growth compared to the first quarter."

However, the impact is believed to be limited. TrendForce analyzed, "DRAM spot prices may rise slightly in the short term, but it is uncertain whether this will continue due to persistent weak demand," adding, "It is also notable that DRAM suppliers and module factories have temporarily halted pricing activities reflecting a cautious approach following the earthquake."

Display manufacturers appear to have suffered relatively greater damage. According to TrendForce, AUO's production equipment is currently all under repair. Innolux has stopped operations at most of its factories except for Fab 6. Authorities expect these companies to be affected for about 1 to 2 days, resulting in a 1.2% impact on total production in April.

This content was produced with the assistance of AI translation services.