Taiwan drought pits chipmakers against farmers

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HSINCHU, Taiwan – The modest rice paddy of Chuang Cheng-deng is a stone’s throw from the nerve center of Taiwan’s computer chip industry, the products of which power much of the world’s iPhones and other gadgets.

This year, Mr. Chuang is paying the price for the economic importance of his high-tech neighbors. In the grip of drought and the struggle to save water for homes and factories, Taiwan has shut down irrigation to tens of thousands of acres of farmland.

The authorities compensate producers for the loss of income. But Mr. Chuang, 55, worries that the thwarted harvest will lead customers to seek other suppliers, which could mean years of depressed earnings.

“The government is using money to shut the mouths of farmers,” he said, inspecting his parched brown fields.

Authorities call Taiwan’s drought the worst in more than half a century. And it exposes the enormous challenges of hosting the island’s semiconductor industry, which is an increasingly indispensable node in global supply chains for smartphones, cars and other keys. vault of modern life.

Chipmakers use a lot of water to clean their factories and wafers, the thin wafers of silicon that form the basis of chips. And with global semiconductor supplies already strained by growing demand for electronics, the additional uncertainty over Taiwan’s water supply should not allay concerns about the tech world’s dependence on the island. and on one chipmaker in particular: Taiwan Semiconductor Manufacturing Company.

Over 90% of the world’s most advanced chip manufacturing capacity is in Taiwan and is managed by TSMC, which manufactures chips for Apple, Intel and other big names. The company said last week that it would invest $ 100 billion over the next three years to increase its capacity, which will likely further strengthen its dominant presence in the market.

TSMC says the drought has not affected its production so far. But with Taiwan’s rainfall becoming more predictable even as its tech industry grows, the island must go further and further to keep water flowing.

In recent months, the government has flown planes and burned chemicals to seed clouds over tanks. It built a seawater desalination plant in Hsinchu, which houses TSMC’s headquarters, and a pipeline connecting the city to the rainier north. He ordered industries to reduce their use. In some places, he reduced the water pressure and started cutting off supplies for two days a week. Some companies, including TSMC, transported trucks loaded with water from other regions.

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But the most drastic measure has been the cessation of irrigation, which affects 183,000 acres of farmland, or about one-fifth of Taiwan’s irrigated land.

“TSMC and these semiconductor guys, they don’t feel any of that,” said Tian Shou-shi, 63, a rice farmer in Hsinchu. “We farmers just want to be able to earn a living honestly.”

In an interview, Taiwan Water Resources Agency deputy director Wang Yi-feng defended government policy, saying the drought meant harvests would be poor even with access to irrigation. . Diversion of scarce water to farms rather than factories and homes would be a “lose-lose,” he said.

Asked about farmers’ water problems, TSMC spokesperson Nina Kao said it was “very important for every industry and business” to use water efficiently and highlighted TSMC’s involvement. in a project to increase irrigation efficiency.

That Taiwan, one of the rainiest places in the developed world, lack of water is a paradox on the verge of tragedy.

Much of the water used by residents is deposited by summer typhoons. But storms also send cascading soil from Taiwan’s mountainous terrain into its reservoirs. This gradually reduced the amount of water the tanks can hold.

The rains are also very variable from one year to another. Not a single typhoon made landfall during the rainy season last year, the first time since 1964.

Taiwan last shut down large-scale irrigation to save water in 2015, and before that in 2004.

“If in 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, professor of civil engineering at the ‘National Taiwan University. “Right now, you have to wait and see.”

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In 2019, TSMC’s facility in Hsinchu consumed 63,000 tonnes of water per day, according to the company, more than 10% of the supply from two local reservoirs, Baoshan and Baoshan Second Reservoir. TSMC recycled over 86% of the water from its manufacturing processes that year, he said, and retained 3.6 million more tonnes than the previous year by increasing recycling and adopting other new measures. But this amount is still low compared to the 63 million tonnes it consumed in 2019 at its facilities in Taiwan.

Mr. Chuang’s business partner at his Hsinchu farm, Kuo Yu-ling, doesn’t like to demonize the chip industry.

“If Hsinchu Science Park was not developed as it is today, we wouldn’t be in business either,” said Ms. Kuo, 32, referring to the city’s main industrial area. TSMC engineers are important customers for their rice, she said.

But it is also wrong, Ms. Kuo said, to accuse farmers of consuming water while contributing little economically.

“Can we not keep fair and accurate accounts of the amount of water used by water farms and the amount of water used by industry without permanently stigmatizing agriculture?” she said.

The “biggest problem” behind the water woes in Taiwan is that the government is keeping water prices too low, said Wang Hsiao-wen, professor of hydraulic engineering at National Cheng Kung University. It encourages waste.

Taiwanese households use about 75 gallons of water per person per day, according to government figures. Most West Europeans use less, although Americans use more, according to World Bank data.

Mr. Wang from the Water Resources Agency said, “Adjusting water prices has a big effect on the most vulnerable groups in society, so when we make adjustments, we are extremely careful. . ” Taiwan’s premier said last month that the government would consider imposing additional charges on 1,800 water-intensive factories.

Lee Hong-yuan, a hydraulic engineering professor who was previously Taiwan’s interior minister, also blames a bureaucratic quagmire that makes it difficult to build new wastewater recycling plants and modernize the pipeline network.

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“Other small countries are all extremely flexible,” Mr. Lee said, but “we have a big country operating logic.” He believes this is because the government of Taiwan was put in place decades ago, after the Chinese Civil War, with the goal of ruling all of China. He has since rejected that ambition, but not the bureaucracy.

Southwest Taiwan is both an agricultural heartland and a booming industrial center. TSMC’s most advanced chip facilities are located in the southern city of Tainan.

The nearby Tsengwen reservoir has narrowed into a swampy stream in parts. Along a scenic strip known as Lovers’ Park, the reservoir floor has become a vast lunar landscape. The water volume represents about 11.6% of the capacity, according to government data.

In the farming towns near Tainan, many producers have expressed satisfaction with living at the expense of the government, at least for now. They remove weeds from their fallow fields. They drink tea with friends and take long bike rides.

But they also take their future into account. The Taiwanese public seems to have decided that rice cultivation is less important, both to the island and to the world, than semiconductors. The heavens – or greater economic forces, at least – seem to be telling farmers it’s time to find another job.

“Fertilizers are more and more expensive. Pesticides are more and more expensive, ”said Hsieh Tsai-shan, 74, a rice farmer. “Being a farmer is really the worst.”

Serene farmland surrounds the village of Jingliao, which has become a popular tourist spot after appearing in a documentary on the changing lives of farmers.

There is only one cow left in town. He spends his days attracting visitors, not plowing the fields.

“Around here, 70 years old is considered young,” said Yang Kuei-chuan, 69, a rice farmer.

Mr. Yang’s two sons work for industrial companies.

“If Taiwan had no industry and depended on agriculture, we could all have starved to death by now,” Yang said.

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