Taiwan is currently facing their worst drought in 67 years, and high tech sectors like the integrated circuits (IC) industry are watching the situation carefully. Even though Taiwan receives an annual rainfall of 98 inches, 2.6 times the global average, they dedicate much of this water to the industry, leaving only 20% available as a resource. Ironically, this strategy has made Taiwan a water resource-poor region with a UN global ranking as the 18th driest place in the world. And unfortunately this year, the reservoirs are quickly running dry. This post explores the scope and impact of the water shortage on the IC industry and recommends supply chain risk mitigation strategies and approaches for downstream high tech OEMs and brand owners.
“Being proactive is not a mysterious quality that we have, or don’t have. It is a way of dealing with things that we can develop and strengthen.”
There was a recent news article about Apple delaying the release of their new Apple Watch from November 2014 to the Spring of 2015. The Chapter 11 bankruptcy filing of GT Advanced Technologies, a supplier to Apple of scratch-resistant sapphire goods, appears to have caught Apple by surprise potentially causing this delay. Obviously this push means a huge loss to Apple, especially since it was targeting its launch to coincide with the holiday shopping season. Apart from the direct impact to Apple watch deliveries, this also means that Apple will now have to abort their plans to replace the gorilla glass with sapphire in their upcoming iPhones.
High tech companies have historically found innovative ways to make their supply chains agile, flexible and responsive to supply and demand shifts. Still, pain points remain. For example, they are faced with local regulatory pressures, supply chain risk and the rapidly increasing costs of outsourcing in traditionally low-cost geographies. These pain points are compelling electronics OEMs to restructure their global supply chains in order to respond more quickly and flexibly to new threats and challenges.
If history is a guide, the high tech industry might have an advantage in pioneering much-needed supply chain risk management practices. Technology companies have traditionally been at the forefront of tackling significant supply chain issues and achieving a competitive edge in designing best practices that benefit their own bottom lines while influencing how others operate both within the high tech sector and in adjacent industries.