The lack of chips may further increase the extreme drought in Taiwan

Taiwan's plans to increase the production of chips, the shortage of which is recorded mainly by car manufacturers, may be affected by the worst drought in decades. This raises concerns that companies will worsen the bad chip supply situation. The pandemic of the new coronavirus, as a result of which world governments have imposed restrictive measures, has significantly increased the demand for laptops and game consoles. This has increased the demand for chips in the sector, which has proved to be a problem as the previously subdued automotive industry recovers unexpectedly quickly. Taiwan began to record supply problems, and automakers around the world had to cut production. In early February, the head of the American carmaker General Motors warned that the lack of chips could cut this year's profit of $ 2 billion (1.65 billion euros). The second American car manufacturer Ford said that this problem could reduce its production by 20 percent in the first quarter. US President Joe Biden signed an executive order this week that launched a 100-day supply chain review for four critical products, including chips. Others are high-capacity batteries for electric vehicles, in addition to rare earth elements and pharmaceutical products. The goal is to increase US chip production. Currently, the United States has turned to Taiwan to help address the shortage of critical components for the automotive industry. Taiwan, one of the largest chip producers, has promised the US, but also Germany and Japan, help by increasing supplies. Now, however, the country is addressing the shortage of water, which consumes a huge amount of chips. Taiwanese producers, including TSMC and United Microelectronics, said they would have to use tanks to provide enough water. TSMC reported that it consumes 156,000 tons of water per day, although more than 85 percent of this amount can be reused. In an effort to maintain sufficient water for key industries, the government limited supplies for the agro-sector in the first phase, but later had to limit them for companies as well. The production of chips needed to make cars, laptops, mobile phones and game consoles consumes enormous amounts of water, but its level in the country's water reservoirs has dropped to a critical level. In the past, Taiwan has recorded an average of three typhoons a year, which bring the island the necessary rain. In 2020, however, Taiwan did not record any. As Lai Zhien-chsin of the Water Resources Agency told Nikkei Asia, the government began taking action in July last year to mitigate the effects of the expected water shortage, a few months before the onset of the classic drought. She added that climate change is advancing rapidly and the country must be prepared for the worst case scenario.