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Taiwan to see less rain, more droughts and violent typhoons

Taiwan may have to brace itself for less rain and more droughts in the future due to the impact of climate change, a weather modeling analysis suggests. Except for northern coastal areas and the windward side of Xueshan (雪山), the second-highest mountain in Taiwan, the country could see a significant drop in spring rain between 2040 and 2060. The phenomenon is also expected in other parts of East Asia, from southern and central China to Japan, wrote iThome, based on an evaluation of a Taiwan-developed weather prediction system.

Meanwhile, the likelihood of typhoons hitting Taiwan is projected to decline by 40% by the end of the 21st century, but they are expected to intensify in severity and impact. For example, a typhoon with the intensity of 2009's devastating Typhoon Morakot could bring one additional meter of rainfall to the country in the coming decades, wreaking even more havoc. If global warming is not mitigated, Taiwan will see a 40% increase in the number of days logging temperatures of 36 degrees Celsius or higher, the forecast shows. Summers look set to last longer, starting in April, and the worst-case scenario could see winter disappear completely, according to Hsu Huang-hsiung (許晃雄), a fellow at the Sinica Academia’s Research Center for Environmental Changes, per CNA.

The gloomy outlook is part of an analysis by the Taiwan Earth System model (TaiESM) under a program sponsored by the Ministry of Science and Technology (MOST). The system has factored in ocean currents, vegetation, air pollution, greenhouse gas emissions, and other indicators, according to MOST.

82% of $Taiwan Semiconductor Manufacturing(TSM)$ current production wafer fabs are located in various parts of Taiwan. In early 2021, Taiwan was hit with a worst drought in history, resulting in water supplies challenges. TSM only has 3 wafer fabs located outside of Taiwan currently, and construction of a wafer fab in Japan will only start in 2022 and tentatively reach production state in 2024.

Have investors taken into consideration potential risks from factors such as climate changes, interest rate hike (which will has an effect on huge capital expenditures for new fabs) and price them in?