How semiconductor firms are chipping in on sustainability

Corporate and regulatory scrutiny are pushing chipmakers to embed ESG in their facility operations

July 19, 2023

Semiconductor manufacturers that have long come under fire for their energy-intensive operations are now actively exploring solutions to decarbonize the sector.

The urgency to address sustainability concerns stems in part from the artificial intelligence (AI) boom, which is expected to boost the production of chips that deliver enhanced processing power.

There’s also heightened scrutiny on semiconductor companies to meet environmental, social and governance (ESG) targets, including from governments with net-zero legislation.

A notable example is Taiwan, which pledged in February to reduce carbon emissions and reach net zero by 2050 despite potential implications on its status as the world’s largest semiconductor manufacturer.

“Semiconductor companies have the responsibility to achieve their corporate ESG targets, while complying with government legislation and keeping business operating expenses low,” says Philip Goh, Executive Director, SEMI Practice Lead, Asia Pacific, JLL.

Finding efficiencies

Among the most common measures companies are implementing focus on driving energy efficiency in day-to-day facility operations.

Take U.S. computer giant Dell, which reuses wastewater generated during chip manufacturing for landscape irrigation at its facility in Xiamen, China.

Initiatives like this can reduce utility consumption by up to 30%, JLL data shows. But retrofitting an existing facility with the right infrastructure, such as pipes and flow switches, poses considerable challenges compared to incorporating them into new constructions.

“New plants are built at the best suitable sites with access to optimum supply chain capabilities and ideal infrastructure of the highest energy efficiency,” says Goh. “Existing plants, on the other hand, have to adapt and change quickly because of technologies emerging every three to five years.”

To put the massive utility use into context, semiconductor manufacturing in Singapore consumes 100 million liters of water per day — the equivalent of daily water use in 86,000 U.S. households.

Several semiconductor companies have publicly committed to ambitious goals to tackle this problem. One such example is technology giant Intel, which outlined net-positive water goals to return more freshwater to local communities than it consumes, which has proven successful in their operations across United States, Costa Rica, and India.

Technology as a solution

In the search for other solutions to optimize energy use, many manufacturers have also turned to digital technology solutions like AI, which complements smart sensors around their facilities that gather intelligence on capacity, volume, and other operational data.

“AI is then used to learn and train the system to automatically trigger the right facility process controls accurately and provide the desired outputs at speed,” says Goh.

Despite its capabilities, AI is only an enabler for maintaining a facility at optimum efficiency.

The bulk of the responsibility still lies with the on-site facilities team to identify areas for improvement, starting with the lowest-hanging fruit, Goh says.

“Conducting an ESG audit, for instance, will help pinpoint potential enhancements from the introduction of efficient lighting solutions to the more complex capital expenditure projects such as upgrading chillers and exhaust fans to energy-efficient alternatives,” he says.

Joining forces

With ESG a top priority, most semiconductor firms recognize that achieving progress on decarbonization requires collaborative partnerships.

For instance, semiconductor giant TSMC recently worked with its suppliers in Taiwan to jointly procure renewable energy as part of carbon reduction efforts in their local supply chain.

Meanwhile, industry-wide alliances such as the Semiconductor Climate Consortium, comprising over 60 companies across the semiconductor value chain, are fostering closer collaboration among key industry players to share best practices.

“These companies may be early adopters of new technology and huge buyers of renewable energy, but they are ultimately heavier consumers of resources relative to other industries,” says Goh.

This pursuit of ESG has even become a matter of survivability for many semiconductor firms, according to Goh.

“ESG has become a non-negotiable for them, because non-compliance will only result in heftier penalties,” he says.

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