Taiwan’s creaking power grid adds to worries over global chip supply

Taiwan saw regional blackouts across the island on Thursday in the latest sign its creaking electrical grid is struggling to meet rising demands for power from its technology manufacturers.

A failure at the Hsinta coal-fired power plant in Kaohsiung led to a power outage in southern Taiwan on Thursday morning. That triggered blackouts in parts of central and northern Taiwan, including the capital Taipei, according to statements from the state-run Taiwan Power Co. The electricity provider said power supply to northern Taiwan resumed by about noon.

While parts of the chip-making hub of Hsinchu were also impacted, the Hsinchu Science Park said its power supply remained normal. A representative for TSMC said it had not been affected, while ASE Technology said the impact was limited and that power supplies were gradually resuming. United Microelectronics said its facilities in southern Taiwan were also coming back online.

“Initial investigation of the power outage shows that it’s due to tripping off of equipment, but it also highlights the dilemma and fragility that northern Taiwan needs to rely on the south for power supply,” said cabinet spokesman Lo Ping-cheng.

The resilience of Taiwan’s power grid has become an increasing global concern in recent years. Home to TSMC, the world’s largest contract chip maker, Taiwan plays a key role in the world’s supply of computer chips, and a few hours without electricity is enough to disrupt global supply chains. A worldwide shortage of semiconductors has heightened concerns, triggering a scramble among major companies, from consumer electronics brands to car makers, to secure scarce supplies of chips.

Surge in demand

The government’s aggressive push into renewable energy and phase-out of nuclear power coincides with a surge in demand as more manufacturers build plants at home rather than overseas. The latest power-hungry chip-making equipment used by the likes of TSMC for their cutting-edge semiconductors are also an increasing burden on the grid.

The ageing Hsinta plant was at the centre of two outages in the space of a matter of days in May last year. Millions of households and nearly half of Taiwan’s industrial parks were affected by insufficient power supply and rolling blackouts.

The reliability of power was one of the main concerns raised by companies in the American Chamber of Commerce in Taiwan’s business climate survey for 2022 released in January. Energy sufficiency was the number one issue the government should be focusing on, ahead of issues such as Covid-19 and cross-strait relations, according to members’ responses.  — Samson Ellis and Cindy Wang, (c) 2022 Bloomberg LP