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Taiwan Water Rationing Could Hurt GPU, Display Panel Production

(Image credit: TSMC)

The ongoing drought in Taiwan has already affected the production of chips such as GPUs and DRAM as well as other components in the country, as we reported several times over the past few weeks. Apparently, the situation is getting worse as local authorities plan to start rationing water supply starting in April. For now, the production of computer chips and displays is proceeding as usual as companies like AU Optronics and TSMC are trucking water in and drilling wells, but the situation may get worse any time now.

Taiwanese authorities on Wednesday announced plans to reduce water supplies to industrial users in the central Taiwanese counties of Taichung, Miaoli, and Changhua by 15% from April 6 compared to usual usage levels, reports Nikkei Asia.

To reduce water consumption further, the authorities will suspend tap water supply in the said areas for two days a week, but those harsher restrictions only apply to the populace, and not industrial users. Meanwhile, the areas affected by the supply limitations will have to use other water sources, including water trucks, local water storage, and groundwater. 

Production of chips and display panels requires massive amounts of pure water. Some water can be recycled, but manufacturers still require a steady water supply. SMT (surface mounted technology) electronics assembly, such as production of motherboards, graphics cards, memory modules, SSDs, and other devices featuring PCBs also requires quite a lot of water, though such manufacturing generally consumes substantially less water than the production of chips or display panels. 

"The scope of the water-saving plan does include the science parks in Taichung and Miaoli. We would advise those companies that are within the scope that could face a two-day water-outage to reserve water or mobilize water trucks in advance," Wang Yi-feng, deputy director-general of the island's Water Resources Agency, told Nikkei Asia. 

Numerous semiconductor and display companies operate out of central Taiwan. AUO, Micron, TSMC, and Winbond have fabs in Taichung. Innolux and GlobalWafers have fabs in Miaoli, whereas Phison has a factory in the county.

TSMC said that the new restrictions would not affect its operations in Taichung as it would increase the consumption of water from the tanker trucks. Furthermore, it is also running drills to get groundwater. Micron could not make any comments as the company is in its quiet period, reports Bloomberg.

Display panel makers AUO and Innolux are reportedly prepared for stricter rationing as they recycle the majority of water they use. They also truck in water and have water storage facilities.

"Like [Innolux], we also have signed contracts with water truck companies, but we see that as the last resort," said Paul Peng, chairman of AUO. "We are prepared. We have a water storage facility underneath each of our plants in Taiwan. Some of the plants have stored up to 10 days of water supply [for our use]."