The world’s largest microchip maker is buying tanker trucks full of water to keep its plant going as farmers struggle to make ends meet during the worst drought in the history of Taiwan.
The Taiwanese government this week said it would tighten water rationing from June 1 in the semiconductor making hubs of Hsinchu and Taichung if there is no significant rainfall by then. This would require companies to cut water consumption by 17 per cent.
Chip manufacturing requires a significant amount of water, and the shortfall in Taiwan, the rainswept island that hasn't seen a typhoon in the last last year, has sounded alarm bells across the world.
The global economy is suffering from a major shortage of semiconductors that are key to almost all consumer appliances and vehicles.
A cut in supply from factories shut by Covid first hit the market last year, but a surge in spending on electrical items during lockdown has savaged the industry.
The automotive sector is by far the hardest hit, with Ford, Volkswagen and Jaguar Land Rover shutting down factories and laying off workers.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest chipmaker, told the Telegraph it had a contingency plan for the punishing drought compounding global supply issues further.
“We have initiated some measures including cutting back water usage and ordering water by tanker trucks for some of our facilities. So far there’s no impact on production and we are closely monitoring the water supply situation,” said a spokesperson.
But the 18-month drought, which has seen reservoirs in the island’s central and southern region plunge below 5 per cent of capacity, not only threatens Taiwan’s technological dominance, it has damaged farmers’ livelihoods and revived calls for long term action over climate change.
In parts of central Taiwan, taps are now turned off two days a week.
"With climate change accelerating, it is a sign that we have to think about how to transform,” said farmer Liu Cheng-yu, 37, who is facing significant losses from his rice paddy fields due to irrigation restrictions.
“That means our previous investment and effort will go to waste completely, and we won't be able to earn any income,” he said. "We are desperately looking for other water resources to prevent the irrigation from halting.”
Mr Liu said he saw the crisis as an opportunity, but other farmers believe they have been shortchanged to save the chip industry.
“We had no choice but to stop planting for this season,” said Ho Wan-chin, 57, who was forced to lease his 100 hectares of land in Hsinchu county fallow.
"The government's policy has always prioritised water supply to industries like the Hsinchu Science Park,” he said. “We are frustrated by the drought, and with climate change, drought will only happen again in the future.”
The island’s Greenpeace chapter agrees, concluding that Taiwan will face a more intense drought by 2030 if nothing is done to reduce carbon emissions.
“Because of semiconductors and the regulation of domestic water use, the public awareness of climate change has indeed increased. However, climate change is never the focus of the discussion,” said June Liu, climate and energy campaigner.
“A long-term and climate-orientated water management policy is lacking and must be built up as soon as possible. Crossing fingers is not how we deal with risks.”
Dr Hsu Huang-hsiung, a climate change expert at Taiwan’s Academia Sinica, said that although this year’s drought was likely more attributable to bad luck rather than proven to be global warming, that it served as a wake-up call for the island.
“This has been a good lesson for the Taiwanese people and government to learn,” he said. “Although this particular event was not necessarily caused by global warming, similar phenomena occurred so that we know that our water resources policy is not well planned.”
The island needed to address leakage in water pipes, hike consumption prices, and explore other water resources like retention pools, he said.
“I think the government will start to come up with better plans for long term policies for water resources for the future.”