Is Taiwan Heading for Another Drought in Key Semiconductor Regions?

Taiwan, home to Asia's largest semiconductor industry, is once again preparing for water shortages less than two years after dealing with the worst drought they have faced in 100 years.  

The water storage levels in Taiwan's reservoirs, particularly in the central and southern areas, have been decreasing in the past several months due to a lack of rain. Taiwan’s largest reservoir, the Zengwen Reservoir, currently only has 11.35% of its average water storage level.  

Additionally, the northern Shimen Reservoir levels have fallen below 50% for the first time in April. Meteorologists predict some relief and rain in May; however, lower amounts of rain are expected in May and June. Due to the low probability of rain in the upcoming season, the Ministry of Economic Affairs (MOEA) increased water conservation measures in Taiwan in March.  

This is not good news for Taiwan’s Semiconductor manufacturing which has been pushing to maintain its dominance in the industry amidst threats of China taking over the island.  

Semiconductor manufacturing requires a significant amount of water, and currently, the island is facing challenges in meeting the demand. For example, Taiwan Semiconductor Manufacturing Co. (TSMC) alone uses 99,000 tons of water per day in its chip facilities in the Southern Taiwan Science Park, and as chip production becomes more advanced, so does the need for water.  

Furthermore, the island's reliance on seasonal rainfall to fill its reservoirs has become less dependable due to weather patterns and rainfall changes. As a result, cities such as Kaohsiung and Tainan, emerging chip hubs, have started implementing water-saving measures. As a result, the water supply for commercial and industrial use, including Tech Parks and Industrialized Zones, has been limited. Businesses must reduce their usage by 10%, especially in the Southern Taiwan Science Park and Kaohsiung industrial zone.

Taiwan faced severe droughts in 2021, which disrupted its manufacturing and agriculture across the country, impacting not only its domestic reliance on these industries but also its exports. Therefore, to prevent a repeat of the past, it is impactive for Taiwan to be proactive in remedial water conservation measures.  

Taiwan’s chip production output is especially important to the country's viability as it is not only an economic necessity but also a crucial aspect of its political significance for allies such as the U.S. in the face of Chinese aggression.

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