Scramble for water pits farmers against thirsty tech goliaths

HSINCHU, Taiwan – Chuang Cheng-deng's modest rice farm is a stone's throw from the nerve center of Taiwan's computer chip industry, whose products power a huge share of the world's iPhones and other gadgets.

This year, Chuang is paying the price for his high-tech neighbors' economic importance. Gripped by drought and scrambling to save water for homes and factories, Taiwan has shut off irrigation across tens of thousands of acres of farmland. Authorities are compensating growers for the lost income. But Chuang, 55, worries that the thwarted harvest will drive customers to seek out other suppliers, which could mean years of depressed earnings.

"The government is using money to seal farmers' mouths shut," he said.

Officials say it's Taiwan's worst drought in more than half a century. And it is exposing the enormous challenges involved in hosting the island's semiconductor industry, which is an increasingly indispensable node in the global supply chains for smartphones, cars and other keystones of modern life.

Chipmakers use lots of water to clean their factories and wafers, the thin slices of silicon that form the basis of the chips. And with worldwide semiconductor supplies strained by surging demand for electronics, the added uncertainty about Taiwan's water supply is not likely to ease concerns about the tech world's reliance on the island and on one chipmaker in particular: Taiwan Semiconductor Manufacturing Co.

More than 90% of the world's manufacturing capacity for the most advanced chips is in Taiwan and run by TSMC, which makes chips for Apple, Intel and other big names. The company said it would invest $100 billion over the next three years to increase capacity, which will likely further strengthen its presence in the market.

TSMC said the drought has not affected its production so far. But with Taiwan's rainfall becoming no more predictable even as its tech industry grows, the island is having to go to greater and greater lengths to keep the water flowing.

The government has flown planes and burned chemicals to seed the clouds above reservoirs. It has built a seawater desalination plant in Hsinchu, home to TSMC's headquarters, and a pipeline connecting the city with the rainier north. It has ordered industries to cut use. In some places it has reduced water pressure and begun shutting off supplies for two days each week. Some companies have hauled in truckloads of water.

But the most sweeping measure has been the halt on irrigation, which affects 183,000 acres of farmland, around a fifth of Taiwan's irrigated land.

"TSMC and those semi­conductor guys, they don't feel any of this at all," said Tian Shou-shi, 63, a rice grower. "We farmers just want to be able to make an honest living."

The deputy director of Taiwan's Water Resources Agency, Wang Yi-feng, defended the policies, saying the dry spell meant that harvests would be bad even with access to irrigation. Diverting scarce water to farms instead of factories and homes would be "lose-lose," he said.