Twenty-Five Years of Building Resilience in Taiw...

Janesta MurphySeptember 27, 2024

On September 21, 1999, at 1:47 a.m. local time, an earthquake measuring Mw7.6 struck in the mountains of Central Taiwan, rupturing 80 kilometers (50 miles) of the Chelungpu Fault with ground shaking exceeding 1.0g in many places (Source: Internal; AXCO, 2024; USGS, 2024a).

Still the strongest and most damaging earthquake recorded in Taiwan during the twentieth century, the Chi-Chi earthquake generated up to 10 meters (33 feet) of vertical displacement in the region of the epicenter (Moh et al., 2000; Sherin et al., 2000).

Generating thirty seconds of strong ground shaking and ground deformation damage up to 120 meters (400 feet) from the fault rupture, thousands of landslides were triggered in the epicentral region.

These landslides cut off access to several mountain villages, with liquefaction, ground subsidence, and ground settlement also contributing to the event impact (Internal).

Figure 1: USGS ShakeMap for the 1999 Chi-Chi Earthquake. (Source: USGS, 1999)

Taiwan was struck with 42,952 aftershocks greater than Mw 2.0. Nine of these had a magnitude over 6.0, triggering additional landslides and collapsed buildings (Lee et al., 2012; Internal).Overall economic losses for the 1999 event were estimated between US$11.5-US$14.5 billion, with insured losses covering around US$600 million (Internal).

Residential Buildings and Public Facilities

Over 8,500 buildings were destroyed and 6,200 more were seriously damaged, with around 90 percent of damaged structures concentrated in the Nantou and Taichung counties, with 53 percent in Nantou County (Tsai et al., 2000).

When the quake struck in 1999, there was a fairly uniform building stock in Taiwan mainly consisting of reinforced concrete structures with infill walls and open layouts on the ground floor. Many impacted structures failed at the ground floor level due to a lack of reinforcement from supporting columns (Internal).

But, with around five percent of the building stock at the time, a large percentage of the impacted buildings were traditional mud brick construction. 43.5 percent of casualties were attributed to mud brick residences, compared to 35 percent of casualties from reinforced concrete buildings (Jaiswal et al., 2008).

There was also extensive damage to public facilities, especially school buildings, exceeding that of other structures due to their homogenousconstruction (Moh et al., 2000).

Business Interruption and Industrial Impacts

Transmission lines running through the Chungliao substation in Nantou County, responsible for distributing power to over 10 million customers across the island were damaged, causing widespread power outages in all central and northern Taiwan (Moh et al., 2000).

Along with many other industrial facilities, Hsinchu Science Park, some 20 kilometers (12.4 miles) southwest of Taipei - responsible for over 50 percent of total semiconductor sales, relies on uninterrupted power supply for operations (Internal).

Rolling outages across the island caused significant and lasting production delays for electronic and semiconductor manufacturers, incurring large losses from business interruption (Internal).

On top of the damage to industrial facilities, the Port of Taichung, the second largest port in Taiwan, was damaged by ground settlement, liquefaction, and ground subsidence, with repairs costing an estimated US$150 million (Internal).

Infrastructure Impacts

Surface faulting and ground deformation during the 1999 earthquake caused extensive damage to roads and bridges in Taichung, Nantou, Chiayi, and Yunlin counties, significantly impacting travel and rescue efforts (Internal). Many central mountain villages could not be reached due to highway and road closures (Internal).

Ground deformation also damaged the tracks of a major railroad near Taichung which inhibited both passenger and freight transport and was responsible for disrupting water services to more than 80 percent of the Taichung region and damaging the Shih-kang Dam (Internal).

Taiwan: Moving Forward with Earthquake Risk

Following the 1999 Chi-Chi event, Taiwan has seen improvements in building codes, public awareness and preparedness, and coordination in rescue and relief efforts (Buckley, 2024; Chang, 2024).

Taiwan's building code is similar to the Uniform Building Code (UBC) used in the Western United States, and thousands of buildings across the island have been reviewed and retrofitted, with another round of building inspections taking place after the 2018 earthquake in Hualien (Buckley, 2024).

The most powerful event since the Chi-Chi earthquake was an Mw7.5 earthquake on April 3, 2024, off the east coast of Taiwan, only 18 kilometers (11 miles) from the city of Hualien, (Chang, 2024). Although the ground shaking was powerful, affecting 19 million residents, and felt as far away as Hong Kong and Shanghai, most buildings in the impacted area remained intact and standing (Buckley, 2024; Chang, 2024).

Eighteen fatalities and just over 1,000 people injured were reported, but this figure is much lower than the >2400 of the 1999 Chi-Chi earthquake and other Mw7.5 events in recent global history. Despite the significant magnitude of this event, the building improvements were evident from the relatively low number of casualties and injuries, and limited damage to infrastructure and the built environment.(Chang, 2024; USGS, 2024).

If the Chi-Chi earthquake were to occur again today, Taiwan would face an insured loss of just under US$12 billion and an economic loss estimated at around US$60 billion (Internal). The largest portion of the insured losses comes from industrial facilities, followed by residential insurance provided by the TREIF (Internal).

Spurred by the 1999 Chi-Chi earthquake to provide a safety net for homeowners, and strengthen the population's insurance provision and financial resilience to earthquake-induced losses,the Taiwanese government set up the Taiwan Residential Earthquake Insurance Program (TREIF, 2024b) insurance pool.

The fund deals with the potential accumulation of residential property with two missions: to increase residential earthquake penetration rate and to raise public awareness and disaster preparedness (TREIF, 2023).

TREIF provides affordable earthquake coverage guaranteed for residents by the government and covers the actual total loss or constructive total loss, which includes anything over 50 percent of the reinstatement cost (AXCO, 2024).

Figure 2: Number of TREIF earthquake policies by year. (Source: TREIF)

Earthquake insurance penetration in Taiwan reaches 38.6 percent of all households as of July 31, 2024, and is slowly increasing with approximately 3.61 million policies (TREIF, 2024a).

The TREIF also contributes to public awareness and education through lectures, promotional activities, and collaboration with the National Science and Technology Center for Disaster Reduction to reach out to homeowners in rural areas (TREIF, 2023).

Figure 3. Insured losses by line of business from a repeat of the Chi-Chi earthquake today with updated exposure data. (Source: Internal)

After the 1999 Chi-Chi earthquake and the major advances in resilience, we examined how seismic risk is managed in the frequently impacted region of Hualien, and how even minor disruption to Taiwan's dominant semiconductor industry can result in outsized losses.

Earthquake Impacts in Hualien

Located in the Circum-Pacific seismic zone, better known as the Ring of Fire, one of the world's three major seismic zones, Taiwan has high levels of seismic activity (TREIF, 2024b). It has been hit by twenty earthquakes of Mw5.5 or higher, fifteen of which reached Mw6.0 or higher since 1999 (USGS, Internal).

In particular, the city of Hualien (pop. ~100,000) on Taiwan's central east coast has seen many Mw6.0 and higher events in the past 25 years.

On February 6, 2018, an Mw6.4 earthquake struck 22 kilometers north-northwest of Hualien City killing 17 people and injuring over 250 others (Internal), the largest event in a sequence of events in the region over several days (USGS, 2018). Multiple multi-story buildings sustained substantial damage, along with many highways and bridges (Internal).

As mentioned earlier, on April 3, 2024, a Mw7.4 earthquake - the strongest earthquake recorded in Taiwan in 25 years since the Chi-Chi earthquake of 1999, hit 11 miles south-southwest of Hualien City, but thankfully with a much lower impact than in 1999 (Chang, 2024; Internal).

Three weeks later, Hualien was hit by two earthquakes (Mw6.1 and Mw6.0) on April 23, 2024, with ground shaking felt across Hualien County and Taipei, but only minor damage was reported (Internal). Another Mw 6.1 event was recorded on August 15, 2024 (Internal/USGS, 2024b).

While not decreasing in severity and magnitude, the earthquakes impacting Hualien City caused fewer detrimental impacts on infrastructure and physical structures (Buckley, 2024)(Chang, 2024).

Both the 1999 Chi-Chi earthquake and the 2018 Hualien earthquake drove action toward improvements in anti-seismic engineering, disaster preparedness, public awareness, and emergency response (Buckley, 2024; Chang, 2024).

Semiconductor Industry and Production in Taiwan

Taiwan is dominant in the global semiconductor industry, producing approximately 60 percent of the world's semiconductors and over 90 percent of advanced chips - all critical components for devices made by many companies including Apple, Nvidia, and AMD. Any stop to production in Taiwan could be devastating across the global supply chain (Duffy, 2024).

Given some semiconductor manufacturing requires continuous, uninterrupted operations, even minor disruptions can cause significant losses (Duffy, 2024). Island-wide power failures from the 1999 Chi-Chi earthquake impacted manufacturing facilities with an estimated US$400 million in losses for semiconductors halfway through production when the earthquake hit (Moh et al., 2000; Robinson, 1999).

At the time of the 1999 earthquake, the majority of Taiwan's microelectronics industry was concentrated in the Hsinchu Science-Based Industrial Park (HSBIP), home to around 30 semiconductor plants (Lee et al., 2000).

The science park is 100 kilometers north of the Chi-Chi epicenter, and only minor physical damage was recorded due to the distance from the epicenter, along with the seismic design of the manufacturing complexes (Sherin et al., 2000).

But even without severe damage to physical structures at the HSBIP, losses only eight days after the earthquake were estimated at US$400 million (NT$12.5 billion), with 95 percent coming from business interruption (Lee et al., 2000; Sherin et al., 2000).

The power failure would have created greater disruption to the industry if state-owned Taipower had not implemented power ration schemes to give priority to HSBIP and other critical facilities (Lee et al., 2000).

Taiwan experienced an earthquake on April 3, 2024, and again, even minor shaking and slight damage to the facilities of the Taiwan Semiconductor Manufacturing Company (TSMC), caused initial loss estimates reported at US$92.44 million (NT $3 billion) (Buckley, Duffy, Wang et al., 2024).

High losses from minimal physical damage highlight the vulnerability of the semiconductor industry to earthquake hazard, and supply chain reliance on Taiwan, leaving global markets vulnerable if manufacturing were to be severely disrupted. This serves as a stark reminder of the concentration and vulnerability of the semiconductor manufacturing sector in Taiwan

Hazard to the Semiconductor Industry

On April 21, 1935, an Mw7.1 earthquake occurred with an epicenter only 20 kilometers (12 miles) from the city of Hsinchu, where the HSBIP is located, showing the possibility for a significant earthquake to strike close to a critical area for the semiconductor industry (Sherin et al., 2000).

Since 1999, the semiconductor industry has grown, with an expansion of the semiconductor industry to the southern part of the island, also a seismically active region (Sherin et al., 2000).

As of 2024, it is estimated that business interruption exposure in the general insurance sector could reach up to US$320 million (NT$10 billion) due to impacts on the high-tech sector, specifically chip manufacturers (Dumaual, 2024). This imminent risk makes it necessary to look at the potential for an earthquake with an epicenter closer to the science park.

For a major earthquake with an epicenter closer to the HSBIP, with peak ground accelerations of 0.35g or greater, the impact on the semiconductor industry would be more severe (Sherin et al., 2000).

Lateral displacement or overturning of equipment, damage to raised access floors, spills of hazardous materials, potential hazardous gas release in facilities without seismic gas shutdowns, loss of critical support systems, severe flooding, and structural damage to the facilities are all plausible for manufacturers in the science parks (Sherin et al., 2000).

If this were to occur, business interruption and losses would be measured in months rather than hours, and the economic loss could exceed US$10 billion (NT $315 billion) (Sherin et al., 2000).

Taiwan is a powerful example of a comprehensive approach to earthquake resilience, not only through physical and economic aspects but also social and organizational dimensions.

The integration of early warning systems, public education campaigns, and cross-sectoral collaboration has been crucial in minimizing the impact of seismic events, in a period of great progress in building resilience after the Chi-Chi earthquake of 1999.

References

Buckley, C., Tobin, M., Zhao, S., & Fei, L. Y. (2024, April 4). Why Taiwan was so prepared for a powerful earthquake? The New York Times. https://www.nytimes.com/2024/04/04/world/asia/taiwan-hualien-earthquake-prepared.html

Chang, W., Gan, N., & Watson, I. (2024, April 5). Taiwan shaken but unbowed as biggest quake in 25 years spotlights preparedness - and lessons learned. CNN. https://www.cnn.com/2024/04/05/asia/taiwan-hualien-earthquake-resilience-dst-intl-hnk/index.html

Cumulative liability and take-up rate. (2024a, August 15). 首頁 (Taiwan Residential Earthquake Insurance Fund). https://www.treif.org.tw/en/xmdoc/cont?xsmsid=0L314503883427467657

Duffy, C. (2024, April 4). The Taiwan earthquake is a stark reminder of the risks to the region's chipmaking industry. CNN Business. https://www.cnn.com/2024/04/03/tech/taiwan-earthquake-risks-semiconductor-chip-industry-tsmc/index.html

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Lee, G. C., & Loh, C.-H. (2000, April 30). The Chi-Chi, Taiwan Earthquake of September 21, 1999: Reconnaissance Report.MCEER.https://www.eng.buffalo.edu/mceer-reports/00/00-0003.pdf.

Lee, Y.-T., Turcotte, D. L., Rundle, J. B., & Chen, C.-C. (2012). Aftershock statistics of the 1999 Chi-chi, Taiwan earthquake and the concept of Omori Times. Pure and Applied Geophysics, 170(1-2), 221-228. https://doi.org/10.1007/s00024-011-0445-5

Moh, Z.-C. N., Hwang, R. N., Ueng, T.-S., & Lin, M.-L. (2000). 1999 Chi Chi Earthquake of Taiwan. http://www.maa.com.tw/common/publications/2000/2000-037.pdf.

NOAA. (n.d.). Significant earthquake information. NCEI Global Historical Hazard Database. https://www.ngdc.noaa.gov/hazel/view/hazards/earthquake/event-more-info/5535

Robinson, S. (1999, September 22). Taiwan's chip plants left idle by earthquake. The New York Times. https://www.nytimes.com/1999/09/22/business/taiwan-s-chip-plants-left-idle-by-earthquake.html

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Wang, E., Cao, E., & Woo, R. (2024, April 18). TSMC estimates losses of $92.4 mln due to Taiwan earthquake. Reuters. https://www.reuters.com/technology/tsmc-estimates-losses-924-mln-due-taiwan-earthquake-2024-04-18/

Janesta Murphy

Intern - Global Earthquake Team, Moody's

Janesta Murphy (JJ) is an intern at Moody's with the global earthquake team, based in California.

She is currently pursuing a bachelor's degree in Design, focusing on environmental science, at Stanford University.

• #Taiwan Earthquake Model
• #1999 Chi-Chi earthquake
• #Chi-Chi earthquake
• #Taiwan Residential Earthquake Insurance Program
• #TREIF
• #Hualien
• #Hsinchu Science-Based Industrial Park