An earthquake with a magnitude of 7.4 struck off the east coast of Taiwan on Wednesday, causing temporary disruptions to the chipmaking industry in the country. The powerful quake, which struck near the island's west coast, raised concerns due to the crucial role that Taiwan Semiconductor Manufacturing Co. (TSMC) plays in global semiconductor chip production.

TSMC is responsible for manufacturing an estimated 92% of the world's most advanced and sophisticated chips. Their factories, known as chip fabs, are located along the western coast of the Taiwan Strait, approximately 90 miles away from the earthquake's epicenter. As a precaution, some of TSMC's fabs were temporarily evacuated for inspections, but workers later returned and are expected to resume chip production throughout the night.

Fortunately, initial inspections conducted by TSMC revealed no major issues at any of the chip sites. While a small number of tools were damaged, there was no impact on critical tools, according to a statement from a TSMC spokesperson. The company emphasized that the disruption was minor, and there are no significant issues affecting chip production.

TSMC's chips are utilized in various industries, ranging from everyday appliances like dishwashers to cutting-edge technologies like generative AI tools, smartphones, laptops, and even fighter jets. Prominent companies such as Apple, Huawei, Nvidia, Tesla, and OpenAI heavily rely on TSMC as a key supplier.

Although the disruption caused by the earthquake was minimal, analysts warn that even a brief disturbance in chip production in Taiwan could result in delayed shipments and substantial financial losses. The exact financial toll of Wednesday's quake is currently being evaluated. Experts have long cautioned about the vulnerability of the global economy to a natural disaster affecting Taiwan's chip sector.

Historian Chris Miller underscored the significance of Taiwan's semiconductor industry, stating that nearly a third of the world's new computing power is fabricated in the country. Miller warned that a disaster in Taiwan could lead to trillions of dollars in costs, far exceeding the economic impact of the COVID pandemic and subsequent lockdowns.

As TSMC's factories in Taiwan continue to assess and recover from the earthquake's effects, the tech industry and global economy remain alert to any potential implications for the supply chain of semiconductor chips.