Taiwan’s Drought Pits Chip Makers In opposition to Farmers

HSINCHU, Taiwan — Chuang Cheng-deng’s modest rice farm is a stone’s throw from the nerve heart of Taiwan’s pc chip business, whose merchandise energy an enormous share of the world’s iPhones and different devices.

This yr, Mr. Chuang is paying the value for his high-tech neighbors’ financial significance. Gripped by drought and scrambling to save lots of water for houses and factories, Taiwan has shut off irrigation throughout tens of 1000’s of acres of farmland.

The authorities are compensating growers for the misplaced earnings. However Mr. Chuang, 55, worries that the thwarted harvest will drive prospects to hunt out different suppliers, which may imply years of depressed earnings.

“The federal government is utilizing cash to seal farmers’ mouths shut,” he mentioned, surveying his parched brown fields.

Officers are calling the drought Taiwan’s worst in additional than half a century. And it’s exposing the big challenges concerned in internet hosting the island’s semiconductor business, which is an more and more indispensable node within the international provide chains for smartphones, vehicles and different keystones of recent life.

Chip makers use a lot of water to wash their factories and wafers, the skinny slices of silicon that type the idea of the chips. And with worldwide semiconductor provides already strained by surging demand for electronics, the added uncertainty about Taiwan’s water provide shouldn’t be more likely to ease considerations concerning the tech world’s reliance on the island and on one chip maker specifically: Taiwan Semiconductor Manufacturing Company.

Greater than 90 p.c of the world’s manufacturing capability for essentially the most superior chips is in Taiwan and run by TSMC, which makes chips for Apple, Intel and different huge names. The corporate mentioned final week that it could make investments $100 billion over the subsequent three years to extend capability, which can probably additional strengthen its commanding presence available in the market.

TSMC says the drought has not affected its manufacturing to date. However with Taiwan’s rainfall changing into no extra predictable at the same time as its tech business grows, the island is having to go to higher and higher lengths to maintain the water flowing.

In latest months, the federal government has flown planes and burned chemicals to seed the clouds above reservoirs. It has constructed a seawater desalination plant in Hsinchu, residence to TSMC’s headquarters, and a pipeline connecting the town with the rainier north. It has ordered industries to chop use. In some locations it has reduced water pressure and begun shutting off provides for 2 days every week. Some firms, together with TSMC, have hauled in truckloads of water from different areas.

However essentially the most sweeping measure has been the halt on irrigation, which impacts 183,000 acres of farmland, round a fifth of Taiwan’s irrigated land.

“TSMC and people semiconductor guys, they don’t really feel any of this in any respect,” mentioned Tian Shou-shi, 63, a rice grower in Hsinchu. “We farmers simply need to have the ability to make an sincere dwelling.”

In an interview, the deputy director of Taiwan’s Water Sources Company, Wang Yi-feng, defended the federal government’s insurance policies, saying the dry spell meant that harvests can be unhealthy even with entry to irrigation. Diverting scarce water to farms as a substitute of factories and houses can be “lose-lose,” he mentioned.

When requested about farmers’ water troubles, a TSMC spokeswoman, Nina Kao, mentioned it was “essential for every business and firm” to make use of water effectively and pointed to TSMC’s involvement in a project to extend irrigation effectivity.

That Taiwan, one of many developed world’s rainiest locations, ought to lack for water is a paradox verging on tragedy.

A lot of the water utilized by residents is deposited by the summer time typhoons. However the storms additionally ship soil cascading from Taiwan’s mountainous terrain into its reservoirs. This has progressively lowered the quantity of water that reservoirs can maintain.

The rains are additionally extremely variable yr to yr. Not a single hurricane made landfall throughout final yr’s wet season, the primary time that had occurred since 1964.

Taiwan final shut off irrigation on a big scale to save lots of water in 2015, and earlier than that in 2004.

“If in one other two or three years, the identical situations reappear, then we will say, ‘Ah, Taiwan has positively entered an period of main water shortages,’” mentioned You Jiing-yun, a civil engineering professor at Nationwide Taiwan College. “Proper now, it’s wait and see.”

In 2019, TSMC’s amenities in Hsinchu consumed 63,000 tons of water a day, according to the company, or greater than 10 p.c of the availability from two native reservoirs, Baoshan and Baoshan Second Reservoir. TSMC recycled greater than 86 p.c of the water from its manufacturing processes that yr, it mentioned, and conserved 3.6 million tons greater than it did the yr earlier than by growing recycling and adopting different new measures. However that quantity remains to be small subsequent to the 63 million tons it consumed in 2019 throughout its Taiwan amenities.

Mr. Chuang’s enterprise accomplice on his farm in Hsinchu, Kuo Yu-ling, doesn’t like demonizing the chip business.

“If Hsinchu Science Park weren’t developed like it’s right this moment, we wouldn’t be in enterprise, both,” mentioned Ms. Kuo, 32, referring to the town’s fundamental industrial zone. TSMC engineers are vital prospects for his or her rice, she mentioned.

However additionally it is mistaken, Ms. Kuo mentioned, to accuse farmers of guzzling water whereas contributing little economically.

“Can’t we take a good and correct accounting of how a lot water farms use and the way a lot water business makes use of and never stigmatize agriculture on a regular basis?” she mentioned.

The “largest downside” behind Taiwan’s water woes is that the federal government retains water tariffs too low, mentioned Wang Hsiao-wen, a professor of hydraulic engineering at Nationwide Cheng Kung College. This encourages waste.

Households in Taiwan use round 75 gallons of water per particular person every day, government figures show. Most Western Europeans use lower than that, although People use extra, in accordance with World Bank data.

Mr. Wang of the Water Sources Company mentioned: “Adjusting water costs has an enormous impact on society’s extra weak teams, so when making changes, we’re extraordinarily cautious.” Taiwan’s premier said last month that the federal government would look into imposing additional charges on 1,800 water-intensive factories.

Lee Hong-yuan, a hydraulic engineering professor who beforehand served as Taiwan’s inside minister, additionally blames a bureaucratic morass that makes it arduous to construct new wastewater recycling crops and to modernize the pipeline community.

“Different small nations are all extraordinarily versatile,” Mr. Lee mentioned, however “we have now an enormous nation’s working logic.” He believes it’s because Taiwan’s authorities was arrange many years in the past, after the Chinese language civil warfare, with the aim of ruling the entire of China. It has since shed that ambition, however not the forms.

Taiwan’s southwest is each an agricultural heartland and a rising heart of business. TSMC’s most advanced chip facilities are within the southern metropolis of Tainan.

The close by Tsengwen Reservoir has shrunk to a marshy stream in some components. Alongside a scenic strip generally known as Lovers’ Park, the ground of the reservoir has grow to be an unlimited moonscape. The water quantity is round 11.6 p.c of capability, in accordance with government data.

In farming cities close to Tainan, many growers mentioned they have been content material to be dwelling on the federal government’s dime, at the very least for now. They clear the weeds from their fallowed fields. They drink tea with pals and go on lengthy bike rides.

However they’re additionally reckoning with their futures. The Taiwanese public seems to have determined that rice farming is much less vital, each for the island and the world, than semiconductors. The heavens — or bigger financial forces, at the very least — appear to be telling the farmers it’s time to discover different work.

“Fertilizer is getting dearer. Pesticide is getting dearer,” mentioned Hsieh Tsai-shan, 74, a rice grower. “Being a farmer is really the worst.”

Serene farmland surrounds the village of Jingliao, which turned a well-liked vacationer spot after showing in a documentary about farmers’ altering lives.

There is just one cow left on the town. It spends its days pulling guests, not plowing fields.

“Round right here, 70 counts as younger,” mentioned Yang Kuei-chuan, 69, a rice farmer.

Each of Mr. Yang’s sons work for industrial firms.

“If Taiwan didn’t have any business and relied on agriculture, all of us might need starved to dying by now,” Mr. Yang mentioned.

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