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Earthquake in Taiwan briefly shuts down chip factories that power the global economy

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The powerful earthquake that struck Taiwan on Wednesday caused a temporary halt in chip production at factories on the island's west coast and briefly disrupted the technology industry.

And that's because of how dependent the global economy is on Taiwan-made semiconductor chips.

An estimated 92% of the world's most advanced chips are manufactured by a single company: Taiwan Semiconductor Manufacturing Co.

The magnitude 7.4 quake struck off the island's east coast on Wednesday. TSMC's factories, known as chip fabs, are located along the west coast of the Taiwan Strait, about 90 miles from the earthquake's epicenter.

TSMC said in a statement that some of its factories were briefly evacuated for inspections on Wednesday, but workers later returned. According to TSMC, they are expected to resume chip production later tonight.

The company said initial inspections showed there were no major problems at any of the chip sites.

“A small number of tools were damaged at certain facilities, partially impacting their operations. However, there is no damage to our critical tools,” a TSMC spokesperson wrote in a statement to NPR.

TSMC supplies advanced chips for everything from dishwater to fighter jets.

Smartphones, laptops and generative AI tools like ChatGPT are powered by TSMC chips. Companies like Apple, Huawei, Nvidia, Tesla, OpenAI and others depend on the chip manufacturer.

Analysts said that even a brief disruption to chip production in Taiwan, while minimal, could delay shipments and cost many millions of dollars. The exact financial consequences of Wednesday's quake are still being determined.

While the worst is far from having come for the tech industry, experts who study Taiwan's chip sector have long said a natural disaster on the island could bankrupt the global economy.

“Nearly a third of the new computing power we rely on each year is made in Taiwan. “This has made TSMC one of the most valuable companies in the world,” wrote historian Chris Miller in the 2022 book “Chip War.”

“Following a disaster in Taiwan, the total cost of the semiconductor shortage would be in the trillions. Losing a third of our production of computing power each year could well be more costly than the COVID pandemic and its economically catastrophic lockdown,” Miller wrote .

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