The 7.4 magnitude earthquake that hit Taiwan on April 3 had the potential to be a disaster both in loss of life and for the infrastructure of a nation responsible for producing more than 60% of the world’s semiconductors. What happened instead was a testament to two-and-a-half decades of investments in resilience.
The earthquake was the largest the country had experienced since a 7.3 magnitude quake 25 years ago when more than 2,000 people were killed, and an estimated 100,000 buildings collapsed. Much blame was later placed on seldom-enforced building codes, and subpar materials.
In stark contrast, around 10 people were killed in the April 2024 earthquake, with minimal damage to buildings and infrastructure. And in terms of impacts to the semiconductor supply chain, the country’s largest manufacturer — Taiwan Semiconductor Manufacturing Company (TSMC) — was able to quickly resume normal operations.
“It was really a two-day event,” says Everstream Analytics senior manager of global risk intelligence Jena Santoro. “And long term, we’re not seeing any lasting impacts, and no concerns of any shortages.”
After the devastation of the 1999 earthquake, Santoro says, the country implemented sweeping changes to its building codes, and retrofitted existing structures to withstand a future disaster. It “changed the game” for Taiwan, allowing it to deliver a vital lesson for stakeholders across the global supply chain regarding the importance of resilience.
This is while much of the recent discussion about supply chain disruptions has centered around diversification. When there are threats to vital shipping lanes like the Panama Canal or the Red Sea, the idea is that you want to have alternatives already in place to avoid any major impacts. April’s earthquake in Taiwan in theory posed a similar dilemma: Are economies that rely on a single country for nearly all their semiconductors prepared for a scenario where that supply is interrupted?
The US took steps to address that fear with the passage of the CHIPS Act in 2022, pouring billions of dollars into building semiconductor plants in Ohio, Arizona, New Mexico, and Texas among other states. But many of those facilities won’t be fully operational until the end of the decade, leaving plenty of uncertainty in the event of any disruption. In Taiwan, disaster was averted, and Santoro argues that it sends a powerful message about how resilience can help avoid disruptions in the first place.
“I wouldn’t say that it negates the importance of diversification,” she clarifies, “but when there is a country focus and investment on resilience to natural disasters and emergencies like this, it lessens the urgency in having a production cluster.”
In effect, she says, it makes the recent earthquake less of a wake-up call when it comes to diversification and more of a “good reminder.” The lessons learned, she concludes, should be less about what happened and more “what didn’t happen, and the reasons why.”
