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Taiwan's Semiconductor Problem

  • 05 February, 2022
  • Harrison Kaye
Taiwan's Semiconductor Problem
Taiwan's Semiconductor Manufacturing Company

Semiconductors are everywhere around us. These small chips power practically all the electronics that we use in our daily lives and in important devices such as planes and jets. Taiwan is a leading global force in semiconductor manufacturing, with over 60% of the market share and an output of 3 trillion NTD in 2020, equivalent to around 107 billion USD. At the heart of this lies the Taiwan Semiconductor Manufacturing Company (TSMC) that drives this production and leads the industry. The semiconductor industry is therefore a crucial part of Taiwan’s economy and position on the world stage, but its impact on the climate is a cause for concern. 

The semiconductor production process is long and arduous, using up huge amounts of energy and causing a great deal of harmful emissions. Furnaces are used to melt down raw silicon and turn it into silicon rods, which are then further sliced into thin wafers of silicon before being layered with different materials. All these different steps are energy intensive, with some requiring extreme temperatures and special conditions. In total, the process from raw silicon to finished product takes around three to four months and this process is becoming more intense with each new generation of semiconductor. The issues with this are many. Carbon dioxide production, intense water usage and the production of hazardous waste are all significant problems that the semiconductor industry causes and must solve if the world wants to mitigate the worst impacts of climate change.

The top semiconductor manufacturing company in the world for the number of chips produced annually is the Taiwan Semiconductor Manufacturing Company, otherwise known as TSMC, based in Hsinchu. Though they produce the most chips, they also emit the most carbon. According to research from the climate organisation Greenpeace, TSMC uses up more electricity per year than the entire city of Taipei.

This issue is only increasing year on year. According to data from Bloomberg, the company has gone from emitting 6 million tons of carbon in 2017 to 15 million in 2020. What’s interesting is the direct benefit that reducing carbon emissions will have on TSMC. Taiwan’s climate has been getting drier and drier as climate change reduces the number of typhoons that bring large amounts of rain. In 2020 and 2021, Taiwan experienced its worst droughts in 56 years. Between June 2020 and May 2021, the rainfall was a pitiful one third of the annual average. Water is crucial for the washing stages of the semiconductor production process so these droughts aren’t great for the industry. During previous droughts, Taiwanese authorities actually prioritized water use for the manufacturing industry over the agricultural industry, a move which wasn’t the most popular and could cause tensions down the line if it happened again.

The company published a Climate Change Statement in 2018 and has committed to reach net zero emissions by 2050. Before then, it hopes to peak its yearly emissions by 2025 and reduce emissions to its 2020 levels by 2030. According to the company, they have installed equipment to control air and water pollution in all of its factories and, in the seven years leading up to 2020, invested over 3 billion USD to reduce their environmental impact. Yet in some respects the TMSC still lags behind it’s competitors. Intel promises to source 100% of its energy from renewable sources by 2030, yet for TMSC their goal for this is 2050. 

Currently, the world is experiencing a shortage of these semiconductor chips due to various issues including COVID-19. This has affected everything from PS5 games consoles to car production numbers, and even the production of iPhones. This shortage is expected to continue well into 2022, and potentially even beyond. Taiwan’s semiconductor industry needs to keep manufacturing these chips, and scale up production to plug the gaps and meet the demands for semiconductors. However it shouldn’t do this at the expense of the climate, and the drought problems show that they simply can’t do this at the expense of the climate unless they want significant long term issues with water supplies. As the world moves towards becoming more eco-friendly, semiconductors will only grow in importance for things such as electric vehicles, wind turbines and solar arrays. Whether Taiwan is able to solve the paradox of producing these environmentally-important semiconductors in a way that doesn’t hurt the environment remains to be seen, but whatever happens will have huge global significance.

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