Drought in Taiwan Pits Chip Makers Against Farmers

smooth wombat writes: Chuang Cheng-deng's modest rice farm is a stone's throw from the nerve center of Taiwan's computer chip industry, whose products power a huge share of the world's iPhones and other gadgets. This year, Mr. Chuang is paying the price for his high-tech neighbors' economic importance. Gripped by drought and scrambling to save water for homes and factories, Taiwan has shut off irrigation across tens of thousands of acres of farmland. The authorities are compensating growers for the lost income. But Mr. Chuang, 55, worries that the thwarted harvest will drive customers to seek out other suppliers, which could mean years of depressed earnings. 'The government is using money to seal farmers' mouths shut,' he said, surveying his parched brown fields.

Officials are calling the drought Taiwan's worst in more than half a century. And it is exposing the enormous challenges involved in hosting the island's semiconductor industry, which is an increasingly indispensable node in the global supply chains for smartphones, cars and other keystones of modern life. Chip makers use lots of water to clean their factories and wafers, the thin slices of silicon that form the basis of the chips. And with worldwide semiconductor supplies already strained by surging demand for electronics, the added uncertainty about Taiwan's water supply is not likely to ease concerns about the tech world's reliance on the island and on one chip maker in particular: Taiwan Semiconductor Manufacturing Company.

More than 90 percent of the worldâ(TM)s manufacturing capacity for the most advanced chips is in Taiwan and run by TSMC, which makes chips for Apple, Intel and other big names. The company said last week that it would invest $100 billion over the next three years to increase capacity, which will likely further strengthen its commanding presence in the market. TSMC says the drought has not affected its production so far. But with Taiwan's rainfall becoming no more predictable even as its tech industry grows, the island is having to go to greater and greater lengths to keep the water flowing. In recent months, the government has flown planes and burned chemicals to seed the clouds above reservoirs. It has built a seawater desalination plant in Hsinchu, home to TSMC's headquarters, and a pipeline connecting the city with the rainier north. It has ordered industries to cut use. In some places it has reduced water pressure and begun shutting off supplies for two days each week. Some companies, including TSMC, have hauled in truckloads of water from other areas.

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