$Taiwan Semiconductor Manufacturing(TSM)$ evacuated production lines and factory areas in response to the major 7.4 magnitude earthquake, indicating disruptions to its manufacturing operations. This could lead to production delays and supply chain issues for TSMC's major customers like $Apple(AAPL)$ and $NVIDIA Corp(NVDA)$ .
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From historical experience, earthquakes affect five sectors of the industry
Taiwan's chip cowos packaging sector, GPU/AI chip capacity.
Taiwan's wafer foundry contract manufacturing, high-end mobile phones, and server chips.
Taiwan's panel LCD industry, will continue to affect the supply.
Japan and South Korea's storage industry, dram and nand/hbm.
Japan's semiconductor materials industry: photolithography/ large silicon wafers/ components.
According to TSMC, their plants design to level 7(earthquake), some of the quartz tube rupture as well as online wafers have been partially destroyed, part of the machine suspended to do downtime inspection to avoid offset.
The estimated impact on TSMC's working hours of about 6 hours or less, the impact on TSMC's Q2 revenue of about 60 million USD, and gross margin less than 50bps.
TSMC is still assessing the full impact of the earthquake, but the disruptions could lead to a "bullwhip effect" where smaller companies and sub-tier nodes reliant on TSMC's production may experience shipment delays. This could impact TSMC's broader supply chain.
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