Taiwan’s Drought Pits Chip Makers Against Farmers

HSINCHU, Taiwan – Chuang Cheng-deng’s humble rice farm is a stone’s throw from the nerve center of Taiwan’s computer chip industry, whose products power much of the world’s iPhones and other devices.

This year, Mr. Chuang pays the prize for the economic importance of his high-tech neighbors. Taiwan has been hit by drought and crawling to save water for homes and factories, and has stopped irrigation on tens of thousands of acres of farmland.

The authorities compensate the producers for the loss of income. However, 55-year-old Chuang fears that the thwarted harvest will lead customers to seek other suppliers, which could mean years of poor revenue.

“The government uses money to shut the farmers’ mouths,” he said, studying his parched brown fields.

Officials call Taiwan’s drought the worst in more than half a century. And it depicts the tremendous challenges associated with hosting the island’s semiconductor industry, which is an increasingly indispensable hub in the global supply chains for smartphones, automobiles, and other cornerstones of modern life.

Chip makers use a lot of water to clean their factories and wafers, the thin silicon disks that form the basis of the chips. And with global semiconductor supplies already being weighed down by soaring demand for electronics, the added uncertainty about Taiwan’s water supply is unlikely to allay concerns about the tech world’s reliance on the island, and particularly on a chip maker, Taiwan Semiconductor Manufacturing Company.

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

The drought has not affected production so far, according to TSMC. With Taiwan’s rainfall becoming unpredictable despite the growth of the tech industry, the island must make ever greater efforts to maintain the flow of water.

For the past few months the government has flown planes and burned chemicals to sow the clouds over the reservoirs. A seawater desalination plant has been built in Hsinchu to house TSMC’s headquarters, as well as a pipeline connecting the city to the rainier north. It has directed the industry to reduce usage. In some places it has lowered the water pressure and cut the supply for two days a week. Some companies, including TSMC, have been pulling in truckloads of water from other areas.

The most comprehensive measure, however, has been to stop irrigation, which affects 183,000 acres of arable land, roughly one-fifth of Taiwan’s irrigated land.

“TSMC and these semiconductors don’t feel it at all,” said Tian Shou-shi, 63, a rice farmer in Hsinchu. “We farmers just want to be able to earn an honest living.”

In an interview, Taiwan Water Resources Agency’s assistant director Wang Yi-feng defended the government’s policies, saying the dry spell means crops will be poor even with access to irrigation. Redirecting scarce water to farms instead of factories and homes would be “lose-lose,” he said.

When asked about farmers’ water problems, a TSMC spokeswoman, Nina Kao, said it was “very important for every industry and business” to use water efficiently and noted TSMC’s involvement in a project to improve irrigation efficiency .

That Taiwan, one of the rainiest places in developed countries, should not have water is a paradox that borders on tragedy.

Much of the water used by the residents is deposited by the summer typhoons. The storms also pour soil from Taiwan’s mountainous terrain into its reservoirs. This has gradually reduced the amount of water that reservoirs can hold.

The rains are also very different from year to year. Not a single typhoon landed in the rainy season last year, the first time since 1964.

Taiwan last stopped large-scale irrigation in 2015 and 2004 to save water.

“If the same conditions reappear in two or three years, we can say, ‘Ah, Taiwan has definitely entered an era of great water scarcity,” said You Jiing-yun, professor of civil engineering at National Taiwan University wait and see. “

In 2019, the TSMC facilities in Hsinchu used 63,000 tons of water per day, or more than 10 percent of the supply from two local reservoirs, Baoshan and Baoshan Second Reservoir, according to the company. TSMC recycled more than 86 percent of the water from its manufacturing processes this year, saving 3.6 million tons more than last year by stepping up recycling and taking other new measures. But that amount is still small next to the 63 million tons consumed at the Taiwanese plants in 2019.

Mr. Chuang’s business partner at his Hsinchu farm, Kuo Yu-ling, does not like demonizing the chip industry.

“If Hsinchu Science Park wasn’t as developed as it is today, we wouldn’t be in business,” 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, said Ms. Kuo, to accuse farmers of devouring water while contributing little economically.

“Can’t we account fairly and precisely how much water farms use and how much water industry uses, and not constantly stigmatize agriculture?” She said.

The “biggest problem” behind Taiwan’s water problems is that the government is keeping water tariffs too low, said Wang Hsiao-wen, a professor of hydraulic engineering at National Cheng Kung University. This encourages waste.

Households in Taiwan use around 75 gallons of water per person every day, government figures show. Most Western Europeans use less than that, although Americans use more, according to the World Bank.

Mr. Wang of the Water Resources Agency said, “Adjusting water prices is having a major impact on more vulnerable groups in society. So we are extremely cautious about adjustments. ”Taiwan’s prime minister said last month that the government would consider adding fees to 1,800 water-intensive factories.

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

“Other small countries are all extremely flexible,” said Lee, “but we have the operating logic of a big country.” He believes this is because Taiwan’s government was established decades ago after the Chinese Civil War with the aim of ruling all of China. It has since lost that ambition, but not the bureaucracy.

Taiwan’s southwest is both an agricultural heartland and an emerging industrial hub. TSMC’s most modern chip facilities are located in the southern city of Tainan.

The nearby Tsengwen Reservoir has shrunk to a swampy stream in some places. Along a scenic strip known as Lovers’ Park, the bottom of the reservoir has become a vast moonscape. According to the government, the water volume is around 11.6 percent of the capacity.

In farming towns near Tainan, many growers said they were content, at least for the time being, to live on the government cent. They clear the weeds from their fallow fields. They drink tea with friends and go on long bike rides.

But they also count on their future. The Taiwanese public appears to have decided that growing rice is less important than semiconductors to both the island and the world. Heaven – or at least greater economic forces – seem to be telling farmers that it is time to find other work.

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

Quiet farmland surrounds the village of Jingliao, which became a popular tourist spot after a documentary film about the changing lives of farmers.

There’s only one cow left in town. It spends its days attracting visitors and not plowing fields.

“Here, 70 counts as young,” said Yang Kuei-chuan, 69, a rice farmer.

Both of Mr. Yang’s sons work for industrial companies.

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

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