Huge Taiwan earthquake will make phones, laptops and TVs more expensive

The earthquake has caused devastation.

Smart tech is expected to become more expensive for the next few months following the massive 7.4 magnitude earthquake in Taiwan earlier today.

The country produces an estimated 80 to 90% of the world’s highest-end microchips, vital components in smartphones, laptops, cars and the burgeoning AI sector.

Following the earthquake, which killed at least nine people and injured hundreds, a number of microchip manufacturers, including the Taiwan Semiconductor Manufacturing Co (TSMC), halted production for several hours following the quake after evacuating factories.

While that may not sound a lot, short disruptions can have big impacts on supply.

Creating microchips, or semiconductors, is a precision process, often in operation uninterrupted 24 hours a day, seven days a week, for several weeks. 

While most of the factories affected were on the west side of the island, away from the quake’s epicentre, the tremors may still have been big enough to destroy entire batches of chips that were in production.

A statement from TSMC read: ‘TSMC’s safety systems are functioning normally. As per company protocol, certain fabs [fabrication plants] were evacuated to ensure personnel safety. We are currently in the process of assessing the extent of the impact.’

The world is already in the midst of a microchip shortage following the Covid-19 pandemic – not due to a slowdown in production as the world went into lockdown, but fuelled by soaring demand for tech products including smartphones, PCs and laptops as everyone adjusted to working from home.

This led to both price increases for manufacturers, which they promptly passed on to customers, and delays in shipping. The average wait for a semiconductor has fluctuated in recent years, but rose from around 11 weeks in March 2017 to 15 weeks in January 2021.

And the shortage didn’t just affect smartphones and laptops.

Car manufacturers were also impacted by supply issues, leading to delays delivering new vehicles. This meant fewer second-hand vehicles hitting the market while their owners waited on replacements, leaving buyers battling for those available and driving up prices.

The ongoing shortage underscores concerns over such a vital industry being centred on a small island nation – one that is also under threat of invasion by China.

However, China itself is so reliant on semiconductors from Taiwan that last year, US congressman Seth Moulton said: ‘One of the interesting ideas that’s been floated out there for deterrence is just making it very clear to the Chinese that if you invade Taiwan, we’re going to blow up TSMC.’

It was an idea that didn’t go down well with Taiwan, but emphasises the strategic importance of the nation’s semiconductor industry – one that, when it doesn’t function perfectly, quickly affects the rest of the world.