Taiwan prioritises chips over food production, suspends irrigation across thousands of acres of farmland as drought continues

Chipmaking facility uses a lot of water, typically two to four million gallons each day

Taiwan's Water Resources Agency has reportedly shut off irrigation across tens of thousands of acres of farmland to ensure that the country's semiconductor industry continues to receive precious water amid ongoing drought.

Wang Yi-Feng, deputy director at the agency, told the New York Times they are prioritising chip production over farming because the converse would be a "lose-lose" situation. Rice farmers would still suffer poor yields despite access to irrigation, he said.

Authorities have reportedly started compensating farmers for their lost income, but farmers are worried that they might lose some of their customers who would now look for other suppliers.

"The government is spending money to shut the farmers' mouths," 55-year-old Chuang Cheng-deng, a rice farmer in Hsinchu, told the publication.

Tian Shou-shi, another farmer, told the NYT that they "just want to be able to live an honest life".

"TSMC and those semiconductors aren't feeling this at all," he said.

The government's decision to suspend irrigation will affect nearly 183,000 acres of farmland.

The last time Taiwan suspended irrigation on a large scale to save water was in 2015.

"If in another two or three years, the same conditions reappear, then we can say, 'Ah, Taiwan has definitely entered an era of major water shortages'," said You Jiing-yun, a civil engineering professor at National Taiwan University.

"Right now, it's wait and see."

Taiwan has been facing one of its worst droughts in decades, with people waiting for monsoon rains to alleviate the shortages. The country usually experiences three or four tropical storms each year, but saw no typhoons in 2020.

In recent months, the government has implemented several water conservation measures that have helped to save more than 700 million tons of water. Earlier this year, President Tsai Ing-wen urged residents to use water sensibly to ensure that there are ample reserves until the monsoon season starts in May.

In other measures, the government has tried to seed clouds above reservoirs, constructed a seawater desalination plant in Hsinchu, and laid a pipeline to connect that city with the rainier north.

Taiwan's agriculture sector accounts for nearly 70 per cent of the country's water consumption, while industry uses about 20 per cent. The remainder goes toward residential and commercial use.

In March, Taiwan's Minister of Economic Affairs, Wang Mei-hua, told reporters that the country had enough water reserves to keep local chip makers running till late May.

He said at the time that the drought had not impacted Taiwan Semiconductor Manufacturing Company (TSMC) - the world's largest contract chipmaker - or other chip manufacturers in the country.

The minister, however, warned that reservoirs in many parts of central Taiwan were running dangerously low.

A chipmaking facility typically uses a lot of water - about two to four million gallons each day - to clean the factories and wafers.

In 2019, TSMC's chip making facilities in Hsinchu consumed nearly 63,000 tons of water a day.

TSMC spokesperson Nina Kao said in March that the company had trimmed its water usage and was also ordering small amounts of water by the truckload for some foundries.

Ninety-two per cent of the world's sub-10nm chips are produced in Taiwan, according to a recent study co-authored by the Semiconductor Industry Alliance, which means that drought situation in Taiwan "may cause severe interruptions in the supply of chips".

There is currently a global semiconductor shortage, and analysts believe this situation could last until next year.

The curtailed supply has disturbed the global auto industry, which reduced chip orders at the start of the Covid-19 pandemic and is now struggling to meet demand.

TSMC announced last week that it would invest $100 billion over the next three years to increase chip production capacity, which will likely further boost its leading position in the chip market.

When asked about farmers' water issues, Kao told NY T that it was "very important for each industry to use water efficiently".

She said the company was involved in a project to increase irrigation efficiency in the country.