May 25, 2021
Taiwan is being squeezed by a resurgent coronavirus on one side and a yearlong drought that is disrupting agriculture, industry and power supplies on the other. Only one of those forces is likely to go away.
The dual stresses can be seen at home in sliding stocks, power and water shortages, and abroad as Taiwan’s chipmakers struggle to fill a global deficit of semiconductors. While the government works to rein in the COVID-19 outbreak, the water and energy strains highlight longer-term challenges from the island’s unusual vulnerability to climate change.
“In the medium term, energy and water are indeed the key factors for Taiwan, not only for food security but also for capturing the opportunities of a growing semiconductor industry and related investment,” said Gary Ng, an economist at Natixis.