The world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), is currently facing the effects of Taiwan entering into an early drought stage as water shortages pile up for its chip production. Along with the latest equipment, materials, research, and facilities, chip fabrication also requires access to water.

As the demand for semiconductors has shot up with the world adjusting to remote working and consumer electronics and enterprise product sales increasing, an ongoing lack of consistent rains in Taiwan has put chipmakers in a frenzy to order water tankers to ramp up production.

Taiwanese Chipmakers Fight Water Problems Amidst Aggressive Chip Production

The lack of an annual typhoon drove down the supply of water available to residents last year, which made officials introduce restrictions to manage the drought, which related to the agricultural and chip sector as well.

Water is an integral part of the process of manufacturing a chip. It is part of a silicon wafer post-fabrication and before it is packaged. As much as four million gallons of pure water is used at chip plants each day, as the raw silicon wafers are polished and made with chemicals before the billions of electrical circuits are imprinted on them through light. The post-treatment water is not suitable for regular use as it consists of these toxic chemicals.

To solve the shortage, TSMC is ordering tankers at the cost of $1,000/truck that contain 20 tons or roughly 53,000 gallons of water. A large amount of water consumption is needed in the chip-making process, which shows why a water tanker shortage that TSMC and other chipmakers’ demand has created in surrounding areas.

Mr. Lai Chien-hsin, Taiwan’s Water Resources Agency’s Director-General, elaborated on the island’s ongoing problems on Wednesday last week. According to him, Taiwan’s Tainan and Chiayi counties on Thursday local time will be placed on an Orange alert, while a similar alert will be placed on the counties of Taichung, Hsinchu, and Miaoli. According to a report by WCCFTECH, “Taiwan’s water shortage alert system uses a Green level to inform people about the possibility of water shortage, a Yellow alert to inform pressure reduction during off-peak hours, an Orange alert to inform the start of the first phase of water rationing, and a Red alert to signal the start of second stage rationing.”

TSMC operates seven facilities in the Hsinchu, three in Tainan and two in Taichung counties. The bulk of these is chip fabrication plants with three of the twelve facilities being advanced backend fabs with each county home to one.

According to data revealed by Taiwan’s Ministry of Economic Affairs (MEA), three of the four water reservoirs that supply water to the Hsinchu county are extremely short on water, with one reservoir that has the responsibility to supply water to Hsinchu, Taoyuan, and Taipei being 54.7% full. Additionally, all three reservoirs supplying to Taichung are below 20% capacity, with the Deji Reservoir being only at 11% of its capacity.

Following directives from the Water Resources Agency, Hsinchu’s industrial users will cut their water use by 11% after an earlier 6% cut and users in Tainan will cut it by 7%. Taiwan’s MEA does not expect the situation to improve until May.

As a global shortage of chips has made car manufacturers shut down production, TSMC is facing increased demand for automobile chips. Its production facility called Fab 18, is located in Tainan, is responsible for processors on the leading-edge 5nm manufacturing node, with orders from Apple Inc and Advanced Micro Devices, Inc using the process.

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