Equipment in Taiwan fabs have been fully recovered after April 3 earthquake: TSMC

Semiconductor manufacturing facilities, popularly known as foundries or fabs, are designed to sustain natural disasters like earthquakes and floods. A reason why even after the massive earthquake of 7.2 Richter scale in Taiwan, the fabs in the region continued to stand untouched. But it doesn’t mean there wasn’t any impact on the chip manufacturing.

Taiwan was struck by its most powerful earthquake in 25 years since a 7.6 magnitude earthquake killed about 2,400 people and damaged or destroyed 50,000 buildings. The 7.4-magnitude quake on April 3 sent boulders and mud tumbling down mountainsides, blocking roads, smashing cars and injuring more than 1,000 people.

Even though there wasn’t any damage on April 3, Taiwan Semiconductor Manufacturing Limited (TSMC) initiated preventative measures to ensure employee safety and wellbeing according to procedure, and some of its fabs were evacuated. All personnel were safe and returned to their workplace shortly after the incident.

However, Danish Faruqui, CEO of Fab Economics told Business Today that the impact of the earthquake on Wafer Fab Manufacturing is in multiple dimensions. “Strong tremors result in vibrations that impact Wafer Level Quality and Reliability at almost every manufacturing equipment in the Fab, which operates with nano-meter precision tasks and have to be repeated over billions of times on a single wafer. Thus, the wafer batches in production during a strong earthquake at most of the Wafer Fab Equipment need to be discarded as not fit for product level and wafer level quality metrics.”

He added: “Almost every Wafer Fab Equipment (WFE) needs to go through RTP (Return to Production) routine involving running multiple sample wafers until production quality is attained via achieving statistical equivalence on manufacturing process specifications. RTP on every WFE is a cost and time penalty on Fab. It is also possible that a fraction of WFE in Fab gets damaged mechanically in case of a severe earthquake like the recent one.”

Based on TSMC ‘s ample experience and capabilities in earthquake response and damage prevention, as well as regular disaster drills to ensure full readiness, it says the overall tool recovery of its fabs reached more than 70% within 10 hours of the earthquake, with new fabs such as the Fab 18 facility reaching more than 80%. As of April 4, the overall tool recovery of our fabs reached more than 80%.

TSCM said: “A small number of tools were damaged at certain facilities, partially impacting their operations. However, there is no damage to our critical tools including all of our extreme ultraviolet (EUV) lithography tools. Certain production lines in areas which experienced greater seismic impact are expected to require more time for adjustment and calibration before returning to fully automated production.”

On Friday evening, TSMC issued a statement stating that apart from certain production lines in areas that experienced a greater seismic impact, equipment in Taiwan fabs have largely been fully recovered as of April 5 thanks to the collaborative efforts of TSMC colleagues and our supplier partners.”

Economic Loss

There are many impact dimensions in addition to equipment and wafers that result in different cost structure penalties and the total impact of a severe earthquake on a Fab is the sum of all. Therefore it is only after a substantial time after the earthquake that the total impact statement can be provided comprehensively.

However, TSMC claimed to maintain its full-year revenue guidance of low-to-mid twenties percentage growth given at the January institutional investors’ conference. Fab Economics, on the other hand, estimates TSMC’s average loss (economic level) under various scenarios aggregated across various dimensions stands around $180-200 Million – by just a few seconds of a Richter 7.2 earthquake.

Faruqui explained, “We assessed the net economic impact of the recent earthquake across the Fab footprint of TSMC in Taiwan by simulating individual Digital Twins of Fabs across Hsinchu, Tainan and Taichung, which has the capability to replicate the individual dynamics of every Wafer Fab Equipment. For example, certain WFE will have RTP timeline of 6-10 hours while EUV lithography equipments responsible for the production of advanced nodes has almost doubled 15-20 hours of RTP. Similarly based on individual Fab capacity and utilization levels our Digital Twin Fab’s Operations Model helps assess the impact of fabricated wafer batches (WIP), lots discarded and, cycle time delay. We have aggregated wafer level impact across all the impact dimensions under various scenario learning formats and estimates provide an average equivalent loss of high single-digit wafer capacity to annual wafer output capacity across Hsinchu, Tainan and Taichung Fabs.”

 TSMC is making a full evaluation of the impact caused by this earthquake and is maintaining close contact with customers and communicating with them regarding impact as appropriate.