Super Typhoon Ragasa brings the chip industry to a standstill

Natural disasters are crippling an already unstable semiconductor supply chain.

This week, Super Typhoon Ragasa, the most powerful storm to strike East Asia this year, battered much of Southeast Asia, including Taiwan, China, and the Philippines. Reports state that the typhoon’s winds exceeded 150 mph, accompanied by torrential rain. The rainfall was so heavy that it caused a barrier lake in Hualien County, Taiwan, to overflow, sweeping through the nearby town like a tsunami.

Widespread flooding, blackouts, and forced shutdowns of critical infrastructure have left many missing and others dead. Key shipping ports in Shenzhen, Guangzhou, and Hong Kong have suspended operations in the wake of the typhoon’s storm surge. Clean-up efforts have started, but the damage is already immense. Images of downed trees, mud-soaked roads, and water-logged buildings are piling in as people leave their shelters.

For the global semiconductor supply chain, already under intense stress from tariffs, AI-driven demand, and rising DRAM pricing, Ragasa’s impact is already adding to the strain.  

Ports are already suffering from congestion due to the upcoming Golden Week holiday and remain closed across Hong Kong, Shenzhen, and Guangzhou. According to one report, “Affected terminals included SCT, CCT, MCT Terminals, and Yantian International Container Terminals (YICT). From Monday on, only outbound transits were permitted for container ships, and small vessels at berth were ordered to be secured in port.”  

This will likely cause delays as organizations wait to determine the extent of the damage and how long it will take for port operations to resume.  

"The typhoon may lead to vessel bunching and backlogs, creating a ripple effect of delays at Southeast Asian ports, which are already experiencing average congestion of two to three days," said a Southeast Asian freight forwarder.

Meanwhile, in Guangdong Province, located in Shenzhen, Apple supplier Foxconn suspended operations in preparation for Ragasa’s landfall. This coincides with the recent launch of Apple’s latest iPhone. The Product Enclosure Business Group of Foxconn is responsible for the iPhone's high-speed connectors, memory, and other mechanical components. According to one article, this sudden environmental disruption has “had a severe impact on global supply chains.”

Foxconn announced on WeChat that it plans to resume operations once the government eases typhoon-related restrictions.  

TSMC, likewise, avoided catastrophic damage; however, the localized flooding and power outages have raised concerns over potential bottlenecks. As the globe’s go-to foundry for chip making, there is a high likelihood that even a minor delay could contribute to longer lead times down the line. This will only be compounded by storm-related port congestion and rerouting. Freight costs, already high, will likely rise as well.

It’s essential to note that while the damage is not earth-shattering, suspended operations and port challenges are occurring at a time of heightened volatility. Trade disputes from shifting U.S. tariff policies and export controls have introduced higher costs and unpredictable restrictions, complicating sourcing strategies.

Simultaneously, the explosive growth in generative AI, data centers, and edge devices has led to shortages in memory, PCBs, and power components. This is in addition to recent moves by the three leading memory suppliers, SK Hynix, Samsung, and Micron, which have ended DDR4 production while increasing general DRAM contract prices.  

Now, with Ragasa disrupting ports, shipping lanes, and contract manufacturing sites, procurement teams face even tighter lead times and rising costs.

Steps forward to combat Ragasa’s challenges

Diversification is essential, especially in the wake of natural disasters. Buyers should avoid over-reliance on single-region suppliers or sole-source manufacturers. Geographic diversification reduces exposure to both geopolitical and climate-driven disruptions. This can be aided by identifying form-fit-function (FFF) alternates and drop-in replacements (DIRs) for functional equivalents that can replace parts that are unavailable or more susceptible to disruption. This is especially pertinent now, as DDR4 enters EOL.

Using digital tools to monitor DRAM pricing, track EOL components, and forecast shortages allows procurement teams to act before a crisis. One can also proactively replace sole-source components by identifying troublesome parts before disruptions, like Super Typhoon Ragasa, occur.

As a hybrid distributor with access to a global network of industry experts and a comprehensive portfolio of franchise and direct partnerships, Sourceability knows how to turn volatility into an opportunity. Using real-time intelligence on pricing, availability, and supplier health, Datalynq, Sourceability’s market tool, can uncover new pathways to avoid component unavailability by delaying production schedules.  

Typhoon Ragasa highlights what the industry already knows: semiconductor supply chain disruption is not a question of if, but when. With smarter sourcing and diversified strategies, companies can protect themselves from these supply chain shocks.