"Impact on Semiconductor Prices if Power Supply is Interrupted"
Taiwan's power crisis could impact the global semiconductor industry, CNBC reported on the 10th (local time).
Cheon Jong-sun, a senior researcher at the Tsinghua Economic Research Institute, said, "Concerns about potential power shortages and declines in power quality and reliability could pose operational risks to the semiconductor industry."
Over the past seven years, Taiwan has experienced three major blackouts. Including smaller outages, several power outages occurred throughout last year. In April alone, multiple power shortage incidents occurred over three days in northern Taiwan.
Joseph Webster, senior researcher at the Atlantic Council Global Energy Center, said, "Taiwan is facing both an energy crisis and, more importantly, a power crisis simultaneously. Partly due to aging facilities, but also because low electricity rates have increased demand, leading to supply shortages."
97% of Taiwan's energy demand is met through imports, making it highly dependent on other countries. Although Taiwan's electricity rates have become cheaper compared to 20 years ago, international raw material prices have soared. Recently, industrial electricity rates were raised by about 15%, but residential electricity rates remain low, CNBC reported.
As a result, Taiwan Power Company (TPC) recorded a deficit of $6.3 billion (approximately 8.68 trillion KRW) in 2023. Michelle Brophy, director at AlphaSense, said, "TPC is running a deficit, which raises concerns about potential power outages for the semiconductor industry and the entire Taiwanese economy." He added that if electricity rates rise, semiconductor companies like TSMC will likely pass costs onto customers to protect profit margins.
Researcher Webster stated, "If Taiwan has to ration power more frequently in the future due to limited supply, Taiwanese semiconductor companies will face difficulties," adding that power supply interruptions will slow semiconductor manufacturing speeds and cause global semiconductor prices to rise. According to him, over 55% of Taiwan's electricity consumption last year was by industrial sectors including semiconductors. He further noted, "Taiwan's power crisis could deal a significant blow to the global semiconductor market" and "could affect industries worldwide."
According to a Greenpeace report, the global semiconductor manufacturing industry is expected to double its revenue by 2030 and consume 237 TWh (terawatt-hours) of electricity by then. In particular, Taiwan's semiconductor manufacturing industry's power consumption is projected to increase by 236% between 2021 and 2030.
Researcher Cheon said, "The Taiwanese government plans power supply according to the needs of major companies," but "due to land constraints, overly rigid policies, and a lack of understanding and capability to resolve power shortages, it is struggling to achieve power infrastructure goals."
CNBC evaluated that meeting Taiwan's power demand is a challenging task and said, "This is increasing concerns among companies about the reliability of power supply commitments to major technology firms."
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