Taiwan Earthquake Forces Chip Manufacturers to Temporarily Halt Production

Overnight, Taiwan experienced its largest earthquake in ~25 years.  This event, which registered as a 7.4 on the Richter scale, has already proven disastrous, with hundreds injured and at least 9 dead at the time of writing.  Notably, the effects of this event extend further and have already had unforeseen negative effects on various industries that play important roles in the local economy; the most obvious of which is chip manufacturing.

Shuttering Foundries

While the nation may not be geographically large, Taiwan is home to multiple chip manufacturers that play critical roles worldwide.  This includes the world's largest and most prominent: Taiwan Semiconductor Manufacturing Co. (TSMC).

As it stands, TSMC is believed to have halted various manufacturing lines in addition to construction on new building sites, as thorough inspections are required post-quake.  For now, it is not clear whether the company's top consumers will see disruptions in the supply chain.  Some of TSMC's more notable consumers include companies like,

• Apple
• NVIDIA
• Qualcomm
• AMD

Essentially, every level of computing has some exposure to TSMC, whether this be an iPhone, graphics card, etc.

Technological and Market Dominance

Due to its size and importance, TSMC shuttering production lines for even a short period of time could have notable effects on supply chains reliant on its products.  Thankfully, this shutdown is expected to be short-lived, with operations resuming as normal in the days to come.

As it stands, it is believed that TSMC's chip manufacturing already represents over 50% of the entire industry by revenue.  It has managed to achieve this through not only scaling its operations, but staying in front of technological innovations while doing so.  This even means mass-producing 3nm chips – the most advanced in the world available to the masses.

Semiconductor Manufacturers

While TSMC may be the largest company of its kind, that does not mean it is without competition.  Despite the shutdowns expected to be short in duration, the event does underscore the fragility of the industry and the importance of learning about alternatives.  The following are a few examples of this, highlighting companies that both design and manufacture chips.

*Figures provided below were accurate at the time of writing and are subject to change.  Any potential investor should verify metrics*

1. Intel Corporation

Intel Corporation (INTC +14.6%)

While it is not as prominent as TSMC in terms of chip manufacturing, Intel remains a cornerstone in the industry. Like TSMC, it is one of the few companies worldwide that not only designs but also manufactures its own chips.

Although TSMC is actively building various manufacturing plants worldwide, its operations remain predominantly in Taiwan for now.  Intel, on the other hand, already has facilities in various nations (U.S., Ireland, Israel, etc.)

Despite facing competition from foundries like TSMC and Samsung, Intel is doubling down on its manufacturing capabilities, with ambitious plans to become a major provider of foundry services globally through its Intel Foundry Services (IFS) division, signaling a new era for the tech giant in the highly competitive semiconductor landscape

At the time of writing, INTC was listed by the majority of analysts as a ‘Buy'

2. Texas Instruments Incorporated

Texas Instruments Incorporated (TXN -1.2%)

Texas Instruments (TI) has long been involved in the manufacturing of semiconductors.  Unlike companies that primarily focus on digital semiconductors, TI's emphasis on analog technology—critical for interfacing real-world signals with digital systems—cements its role as a pivotal player in the semiconductor space.

TI's longevity and success stem from its continuous innovation, strategic acquisitions, and strong customer relationships across diverse industries.  The company's operational model, marked by significant investments in research and development, ensures its products meet the evolving needs of a digitalizing world, reinforcing TI's enduring legacy and its indispensable role in shaping the future of technology.

At the time of writing, TXN was listed by the majority of analysts as a ‘‘Buy'

3. Samsung Semiconductor

Samsung Semiconductor is a subsidiary of Samsung Electronics, which is responsible for designing and manufacturing semiconductors.  Unlike Intel and Texas Instruments, which are openly traded on stock exchanges like Nasdaq and NYSE, exposure to Samsung Electronics can be attained through either Global Depository Receipts (GDRs) or Over-the-Counter (OTC) markets.

Dominating the DRAM and NAND flash markets, Samsung's memory chips are essential for a vast array of products, from smartphones and personal computers to servers and data centers.  Beyond memory, Samsung has aggressively expanded its foundry business, becoming the primary challenger to TSMC, by offering cutting-edge process technologies for manufacturing high-performance, energy-efficient chips for clients worldwide, including major tech companies.