Munich Industry around the world desperately needs more semiconductors – and manufacturers are only too happy to supply them. Especially since they collect very high subsidies for their new factories. The US company Micron has just announced plans to build a plant in Japan for almost four billion dollars.
According to the supply chain specialist Everstream, a total of almost 80 new plants will start operating around the world between 2021 and 2024. The factories of Chinese companies are not even included due to a lack of reliable information.
However, the boom has its price: the chip industry is one of the major polluters. The industry emits as much climate-damaging greenhouse gases as half of US households every year, estimates the consulting firm BCG.
Particularly critical are the sites currently under construction, costing up to ten billion dollars, for the most advanced manufacturing processes. “The smaller the structural sizes, the more complex the production processes – and the greater the environmental impact,” warns BCG expert Jan-Hinnerk Mohr.
For comparison: According to BCG, the two-nanometer technology currently under development will cause 946 kilograms of CO2 emissions per production unit. With the 28 nanometer process, which has been established for many years, it is only 302 kilograms. A nanometer is about as big as a fingernail grows per second.
BCG estimates that the industry’s total CO2 emissions climbed to 171 megatons last year, a good quarter more than in 2018. This is becoming an ever greater burden for the chip companies. Because customers put pressure on you.
“We want to be carbon neutral across our supply chain by 2030,” said Cathy Kearney, Apple’s European head recently. Business as usual is therefore not an option for the semiconductor manufacturers. “2030 is not that far away,” warns the manager.
Semiconductor production requires a lot of energy, chemicals and water.
(Photo: Bloomberg)
Apple is particularly important for chip manufacturers: the iPhone group is by far the largest customer worldwide. The industry achieves more than ten percent of sales with the Californians alone. But other customers are also pushing the semiconductor industry to become more sustainable, emphasizes BCG consultant Mohr: “Many customer industries are pursuing this with vigour.”
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The chips themselves are made in clean rooms that are many times cleaner than operating theaters. Filtering the air alone costs a lot of energy. In addition, the production processes often require extremely high temperatures and are therefore real power guzzlers.
That’s not all: “Many of the gases used by the chip industry are extremely harmful to the climate,” explains expert Mohr. The corporations also use metals such as gold, aluminum and copper, as well as many chemicals.
And the raw material for the discs on which the chips are made is also difficult to produce. The most widespread silicon has a melting point of around 1400 degrees, while silicon carbide, which is important for electromobility, has a melting point of more than 2000 degrees.
The Taiwanese manufacturer is again investing 36 billion dollars this year.
(Photo: Bloomberg)
And the manufacturers need something else: water, and in enormous quantities. “The water supply is a huge problem,” says Alan Priestley from market researcher Gartner. The three major semiconductor producers in Dresden, i.e. Bosch, Globalfoundries and Infineon, use almost half of the water in the entire city. Nowhere else in Europe are there as many chip factories in such a small area as in the Saxon state capital.
However, the city and the Free State do not find it easy to meet the requirements of the industry. The investments in the infrastructure are “extremely challenging”, says Oliver Schenk, head of the state chancellery.
>>Read here: The federal government expects chips to be “undersupplied” in the coming decade
Dry summers like last year are a horror for the chip companies in Dresden. For weeks hardly a drop of rain fell from the sky, at times the Elbe was more like a trickle than a proud European river. Nevertheless, the Dax group Infineon has just started building a new factory in Dresden that will cost five billion euros. In the future, however, the company wants to recycle a large part of the water.
TSMC gets the water by truck
It was even worse in Taiwan in 2022. In its home country, TSMC had to bring water in tankers to keep production going. A standstill at the group could quickly paralyze the global economy. TSMC is by far the leading contract manufacturer in the chip industry, from Apple to Qualcomm almost all major semiconductor suppliers use the capacities.
Reducing water consumption is therefore a top priority at TSMC. After all, the company is also building its first location in the USA, in the rather dry state of Arizona.
The example of TSMC shows the great dilemma of the industry. Because the group is growing rapidly, it will consume more resources every year in the foreseeable future, despite all savings efforts. TSMC wants to put another 36 billion dollars into new plants this year, just as much as in 2022. It will therefore take until 2030 to get climate-damaging emissions back to the 2020 level, explains Cliff Hou, Head of Sales for Europe and Asia.
Intel buys from 9000 companies
However, the chip industry still has a problem: the manufacturers know how many resources they use themselves and what environmental impact this has. But what about the suppliers? “The supply chain is extremely long and complex. That makes it difficult for the chip companies to get the necessary data,” says consultant Mohr.
Example Intel: The US group estimates the number of its direct suppliers at around 9000 companies from 85 countries. The company from Silicon Valley is in the process of setting up two plants in Magdeburg. According to the company, Intel used 93 percent green electricity at its own locations last year.
Meanwhile, TSMC is trying to involve its suppliers. The company has just signed a 20-year contract with a solar power supplier in Taiwan. TSMC not only wants to use this to supply its own plants, but also those of suppliers.
>>Read here: TSMC is approaching a possible billion-euro investment in Dresden
TSMC and its suppliers have enough electricity to power 250,000 homes annually. The company not only wants to do business in a more environmentally friendly way, but also want to give its suppliers easy access to green energy.
However, preventing new chip factories and shutting down old ones is not a good idea, despite all the environmental pollution, says consultant Mohr: “The semiconductor industry enables other sectors to reduce energy consumption. All in all, this is positive for the climate.”
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