A significant power disruption impacted Taiwan this week, one that likely reverberated across multiple consumer electronics supply chains including that of Apple.
Our readers who reside in high-tech and consumer electronics supply chain networks can well attest to how critical Taiwan has become as a prime epicenter of multi-tier high tech component and finished goods manufacturing. Some of the largest semiconductor fabs as well as LCD screen and memory manufacturers have major manufacturing presence on the island. Past incidents of major earthquakes, typhoons and associated floods have conditioned high-tech supply chain teams to keep a keen eye and open communication links to Taiwan based suppliers.
On Tuesday, Taiwan households and businesses encountered what was described as a massive electrical power disruption affecting upwards of 7 million households and many businesses. The disruption occurred on a very hot day prompting additional discontent. Taiwan Power Co, indicated that the blackout was the country’s most severe since a 1999 earthquake that struck the country.
According to published reports from Reuters as well as Bloomberg, the outage occurred through a combination of what was described as “structural problems” and human error originating from the island’s biggest state-owned gas-fired power generating facility. The disruption extended close to a 24-hour period, from Tuesday to Wednesday afternoon. Reuters indicates the outage resulted in about $3 million worth of losses for 151 companies in industrial parks and export processing zones on the island.
The Bloomberg report indicates that the combination of hot weather and infrastructure damage from previous typhoons has left the island barely able to supply sufficient electricity to users. Efforts were further underway to phase-out the prior reliance on nuclear-powered electricity generating plants.
The incident itself prompted a public apology from Taiwan President Tsai Ing-wen with government officials pledging to investigate root causes of the incident. One government official called for the need for outside investigators.
Both reports indicate that the impact to the island’s semiconductor production lines was minimal. Taiwan’s Hsinchu Science Park is noted as the “heart” of the semiconductor industry. TSMC indicated no impact to output, while contract manufacturer Pegatron also indicating minimal disruption, which should have provided a huge sigh of relief to Apple’s sales and operations planning(S&OP) teams who are smack in the production ramp-up phase for three planned new models of iPhones expected to be announced next month.
High-tech and Consumer electronics product management and supply chain teams likely dodged a huge bullet this week, but cannot afford to rest easy. From current accounts, Taiwan’s electrical power generation reliability appears fragile at-best and additional hot weather or surge power demands could trip another incident.
For supply chain disruption risk, Taiwan has likely reached a keen point of supplier monitoring and observation for many weeks to come.