Earthquake in Taiwan, home to TSMC and Micron fabs, to add boon to Korean chipmakers

SEOUL, December 29 (AJP) -A powerful level-4 earthquake in Taiwan, home to a large share of the world’s semiconductor manufacturing capacity, has renewed concerns over supply-chain vulnerability and could ultimately strengthen the competitive position of South Korean chipmakers Samsung Electronics and SK hynix, analysts said. 

Some semiconductor fabrication plants in Taiwan temporarily halted operations after a magnitude-7.0 earthquake struck the island on Saturday.

Taiwan Semiconductor Manufacturing Co. (TSMC) activated emergency protocols, evacuating workers at facilities in the Hsinchu Science Park and conducting inspections of equipment and clean rooms.  Based on TSMC's statement to local media, no damage has been reported yet, with all plants operating at full capacity and the status of the affected facilities was restored within just ten hours after the earthquake. 

The quake was the latest in a series of strong earthquakes to hit parts of the Pacific Ring of Fire since October, including areas near Taiwan and Japan, underscoring the region’s seismic risk. 

Taiwan accounts for roughly 70 percent of global contract chip manufacturing, hosting major players such as TSMC, UMC and Powerchip. The island also houses Micron Technology’s DRAM production facilities. Micron produces about 16 percent of the world’s DRAM, according to industry estimates. 

While companies are still assessing the impact, analysts project prolonged disruptions could alter competitive dynamics with its closest rival, Samsung Electronics. Semiconductor manufacturing is highly sensitive to interruptions: even brief stoppages can force wafer scrapping and lead to significant financial losses, particularly at advanced nodes. 

The risk is most acute in leading-edge processes such as 3-nanometer chips, where TSMC and Samsung are among the few global producers and where supply disruptions can influence customer allocations and long-term contracts. 

TSMC has previously disclosed sizable losses linked to natural disasters. After a magnitude-7.2 earthquake in April last year, the company estimated losses of about $60 million, while earlier incidents — including a major power outage in 2021 and an earthquake in 2022 — also led to wafer losses and tens of billions of won in damages, according to company disclosures and industry reports. 

The latest quake could also strengthen the negotiating position of Samsung Electronics and SK hynix in DRAM pricing talks. If Micron, which produces a large share of its memory chips in Taiwan, experiences output constraints, global memory supply could tighten, supporting higher prices. That would likely provide a tailwind for South Korean suppliers’ earnings next year, analysts said. 

Historical precedent supports that view. After Japan’s 2011 Great East Japan Earthquake, prices of memory products such as DRAM and NAND flash rose more than 20 percent in the short term as markets priced in supply disruption risks. 

Over the longer term, repeated reminders of seismic and geopolitical risks are expected to reinforce efforts by global technology firms to diversify semiconductor supply chains away from excessive dependence on Taiwan. Online journal Foreign Policy recently noted that major earthquakes highlight how concentrated advanced chip manufacturing remains in a geographically vulnerable location, underscoring broader strategic risks.  

Samsung Electronics and SK hynix are set to start mass production next year of sixth-generation high-bandwidth memory (HBM4) for Nvidia’s next-generation artificial intelligence accelerators. Japan’s Nomura Securities recently raised its forecast for Samsung Electronics’ operating profit next year to 133.4 trillion won, citing continued AI-related investment and expanding server demand, and noting that pricing power in the memory market is gradually shifting from buyers to suppliers.