One might say it’s just a run of bad luck. But it’s hard to deny that for several months now, the tech industry as a whole has been plagued by bad news. We’ve learned that Taiwan is facing its lowest rainfall levels in 75 years. And, of course, the hardest-hit area is precisely where TSMC’s most modern factories are located .
The water shortage threatens TSMC’s production.
TSMC is the undisputed leader in manufacturing advanced chips for other companies. Apple, AMD, and Nvidia are its main customers, and you’ve all seen that even when everything seems to be going well, TSMC struggles to meet the full demand, leading to delays and price hikes. As if that weren’t already a major problem, a new crisis seems to be looming. The island of Taiwan is experiencing its worst water shortage in 75 years. The Hsinchu technology hub, located in the western part of the island, is particularly affected. The problem is that this region is home to the fabs of the giant TSMC, and particularly its cutting-edge infrastructure such as the 2nm process. Authorities have issued a yellow alert. However, it should be noted that this situation has not yet impacted TSMC’s production. Nevertheless, this concerning situation is likely to worsen with the arrival of summer and its high temperatures. Water supply could then become a critical issue.
Why is water a critical issue?
The production of a single chip requires approximately 7,000 liters of water. Water is essential for chemically etching circuits and conductive materials, as well as for “washing” the wafers. These steps are indispensable for keeping the chips free of impurities. With the increase in demand for chips, water consumption has skyrocketed over the past 10 years. In early 2020, it was estimated that a single chip used in a smartphone required 30 liters of water… While TSMC and others have made efforts to recycle this water (88% of the water used by the Taiwanese manufacturer is recycled), the demand remains high. The droughts that have hit the island in recent years have already impacted production. In some cases, local authorities have transported astronomical amounts of water by tanker trucks and sometimes even diverted water to factories by imposing consumption limits on the population…
A problem that adds to others
The conflict in the Middle East also brings its share of bad news. Asian countries rely heavily on the Strait of Hormuz for their oil supply. What does this have to do with TSMC? Nearly 83% of the island’s electricity generation (2023 figures) comes from burning fossil fuels—coal, but also LNG from Qatar…
In short, 2026 has barely begun, and many of us are already hoping it will end quickly.
