Taiwan Braces for Drought in Key Chip Hubs Again

Water challenge comes as island pushes to maintain ‘silicon shield’ against China

TAIPEI — Taiwan, home to Asia’s biggest semiconductor industry, is once again bracing for water shortages less than two years after overcoming its worst drought in a century.

Chipmaking is a thirsty business. Take Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker, for example. Its chip facilities in the Southern Taiwan Science Park alone consume 99,000 tonnes of water per day, according to the company’s latest figures. And as chip production techniques become more advanced, their water needs grow.

In addition, the island relies heavily on seasonal rainfall to fill its reservoirs — and climate change has made this a less reliable option. This year, cities have already started preparing for constraints.

Kaohsiung, an emerging chip hub, and Tainan, where TSMC and United Microelectronics Corp. (UMC) both have chipmaking facilities, introduced water-saving measures this month, including reducing the pressure in public water supplies at night. The Southern Taiwan Science Park has asked suppliers to cut their water use by 10% and Kaohsiung will follow suit at its industrial zone from March 30.

Such moves are aimed at avoiding a repeat of 2021, when drought was so severe that it disrupted manufacturing and agricultural activities across the island. Manufacturers like TSMC resorted to rented water tanks and newly drilled wells to keep factories running at a time when the world was counting on Taiwan to ease an unprecedented chip shortage.

Keeping the supply of chips flowing is not just an economic imperative for Taiwan. Being a vital source of semiconductors makes the island politically important for allies such as the U.S. in the face of Chinese aggression. If Taiwan’s chip output is dented, its “silicon shield” could also weaken.

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