Outlook 2022: A sustainable future?

4 mins read

The semiconductor industry has a critical role to play in meeting climate goals, but it will have to manage its own huge carbon footprint.

With demand for silicon chips booming and with targets being set to meet global climate goals that, in many cases, are dependent on new technologies that rely on semiconductors to reach them, the chip industry is facing demands that it get its own ‘house in order’.

Semiconductors are the fundamental enabling technology for all forms of modern electronics - whether that’s for the Internet of Things (IoT), wearable devices, wind turbines or solar arrays – and these technologies will be vital in cutting our carbon footprint and improving the quality of millions of peoples’ lives.

Semiconductors are, for example, integral to the successful development of electric vehicles. Improved battery management and the development of more efficient batteries will enable car manufacturers to extend battery range and reduce the size, weight and cost of the technology – but all these developments are dependent on silicon chips.

Today’s chip industry is confronted by several issues whether that’s developing and experimenting with new semiconductor materials, dealing with the rising cost of rare earth metals or coping with the accelerated adoption of new technologies from artificial intelligence to the Internet of Things.

While these new technologies can have a positive impact on the planet and help reduce our carbon footprint, they are dependent on the semiconductor industry and it is an industry which has a massive carbon footprint of its own, using vast amounts of materials and chemicals with attributes that can have a serious environmental impact.

While the industry is careful in the use of these chemicals, for example deploying highly controlled manufacturing tools, it still releases vast amounts of waste material into the environment.

New and innovative chemicals remain critical to further innovation, so a trade-off exists between the needs of the industry and that of the environment and climate.

Could fabrication plants be run more efficiently, and could new technology be better used to regulate operating conditions such as the facility’s air and water temperature, humidity or pressure?

Chip manufacturing also requires huge amounts of energy and water, for example a chip fabrication plant can use millions of gallons of water a day and in the process create a vast amount of hazardous waste. In fact, a typical large production facility can use up to 4.8 million gallons of water per day. Intel’s campus in Ocotillo, Arizona, for example, consumes 927m gallons of fresh water each year, enough to fill over a thousand Olympic swimming pools.

Taiwan is the world’s largest producer of semiconductors, and it relies heavily on water to clean and manufacture them.

Over the past 18 months water shortages have caused the Taiwanese government to stop irrigating thousands of hectares of crops and divert precious water supplies to meet the demands of the semiconductor industry.

The importance to the Taiwanese economy of the sector is immense and the government has invested in new desalination plants and is using military planes to spread cloud-seeding chemicals in a bid to encourage rain.

The water crisis in Taiwan has highlighted the demand and competition for resources that’s been generated by the semiconductor industry. The industry isn’t, however, just dependent on water or the use of chemicals, but electricity too.

Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest chip manufacturer, and it uses almost 5% of all Taiwan’s electricity and that is expected to increase further, to over 7%, by the end of next year.

Consequently, analysis shows that it’s chip manufacturing, rather than device energy consumption or hardware use, that accounts for most of the electronic industry’s carbon output.

The global shortage of high-end chips caused by the pandemic has also had an impact with a growing number of countries now looking at the possibility of investing heavily in new chip production.

In the US, the Chips for America Act is looking at a $52bn investment in new US semiconductor capacity, while the EU has put forward similar legislation with the aim of increasing its share of the global chips market to 20% by 2030.

But with all these proposed increases in capacity, what of the environmental consequences? The demand for resources and the environmental impact are likely to grow as the industry grows, so how will the EU and US go about meeting their international climate goals when it comes to reducing their carbon footprint?

A change in perception

The call for greener supply chains is growing from both customers and investors and there has been a palpable shift in the semiconductor industry as it looks to address its climate footprint.

Jean Chong, vice president or ethics and corporate social responsibility at ONSemi expressed what many in the industry are now thinking, “We understand the importance of being a good, corporate citizen and doing our part to reduce our negative impacts to the environment and society.”

Investors are also asking more questions about companies’ environmental, social, and governance (ESG) impact and that is affecting the way in which companies operate.

In terms of recruitment too, people are asking more about sustainability to inform their employment choices, and that is particularly the case when it comes to the younger generation who are more engaged with the climate crisis.

Companies who have chosen to pay more attention to environmental issues by adopting sustainability targets are now looking to use the Global Sustainable Development Goals (SDGs) set by the United Nations.

TSMC has pledged to reach net zero emissions by 2050 and is set to buy all its energy from a 920-megawatt offshore windfarm being built by the Danish company Ørsted in the Taiwan Strait. Intel has also made a commitment to source 100% of its energy from renewable sources by 2030.

While the TSMC deal is said to be world’s largest corporate renewables purchase agreement, it not only benefits the environment but TSMC too.It will be guaranteed a clean electricity supply and only have to pay wholesale prices and, in the process, remove itself from price shocks – as a consequence, more manufacturers are likely to follow its lead.

Reaching net zero is not going to be easy and there are certainly those that doubt that the industry is serious about cleaning up its act.

But with the demand for technology continuing to grow money is unlikely to be an issue for cash-rich chip companies – they will have the resources to invest in new green carbon measures.

So, the real questions that need to be answered are will customers be willing to pay for greener devices, and will new green technologies that are intended to save the environment and prevent global warming end up causing us more problems. As demand soars and the industry mines and processes the minerals required for magnets and batteries, will they simply create new environmental and pollution crises?