The global chip industry has a colossal problem with carbon emissions
- The little pieces of silicon are vital in today's technology-driven economies but their impact on the planet isn't always positive.
- Vast amounts of energy are required to manufacture the chips that lie beneath the hood of a whole manner of items — from fighter jets and cars to kettles and doorbells.
- The world's biggest chipmakers —TSMC, Samsung and Intel — have all pledged to cut their emissions.
Computer chips may be in short supply, but the semiconductor industry's carbon emissions are plentiful.
The little pieces of silicon are vital in today's technology-driven economies, but their impact on the planet isn't always positive.
Vast amounts of energy are required to manufacture the chips that lie beneath the hood of a whole manner of items — from fighter jets and cars, to kettles and doorbells.
A team of researchers at Harvard University wrote in 2020 that chip manufacturing "accounts for most of the carbon output" from electronic devices.
While some of this energy comes from renewable sources, much of it comes from fossil fuels like coal and gas, and some chipmakers now emit more carbon than well-known carmakers.
Energy intensive processes
Several aspects of the semiconductor production process require vast amounts of power, according to Forrester analyst Glenn O'Donnell.
To begin with, the chipmakers need to take raw silicon (i.e. sand), melt it down, purify it, and then "grow" the silicon "rods," O'Donnell told CNBC. "The furnaces [needed] to do this are extremely energy hungry," he said.
The rods of purified silicon are then "sliced like deli meat into thin wafers," upon which chips are built, O'Donnell added.
Various materials are layered onto the wafers in a series of steps that use energy intensive equipment. Diffusion furnaces, ion implanters, and plasma etching-machines all need considerable amounts of power, O'Donnell said, adding that some require very high temperatures.
The diffusion furnaces, for example, run at 1,200 to 2,000 degrees Fahrenheit and the wafers sit in them for hours at a time to change the surface characteristics of the silicon.
Taiwan's chip behemoth
Most of the world's chips are made in Asia, with Taiwan being a particular hotbed of activity thanks to the presence of the Taiwan Semiconductor Manufacturing Company, which produces more chips than any other company worldwide.
Yung-Jen Chen, a Greenpeace researcher in Taiwan who leads the charity's climate corporate team, told CNBC that the company emits more carbon than any other chipmaker. It's "way ahead [of] others," she said.
The Hsinchu-headquartered firm, which makes chips for the likes of Apple and Tesla, uses more electricity each year than Taiwan's capital Taipei, according to Greenpeace.
As a result of its power consumption, TSMC emitted 6 million tons of carbon in 2017, 8 million tons in 2019, and 15 million in 2020. In the last couple of years, TSMC's greenhouse gas emissions have overtaken those of automotive giant GM, according to data from Bloomberg.
Gartner analyst Alan Priestley said it's important to compare the semiconductor industry's emissions to emissions for other industries such as logistics, aviation and shipping.
TSMC's emissions, which are shared in its annual sustainability reports, are "still increasing rapidly due to constant expansion," Chen said.
Indeed, TSMC is in the process of setting up huge new factories in Taiwan and Arizona. While these multibillion-dollar facilities will increase the supply of chips, they will also increase the amount of electricity that TSMC uses.
Shift to renewables
"In order to reduce carbon emissions, switching the electricity sources to clean energy is the key," Chen said, adding that chipmakers are "eager" to do this as soon as possible.
After TSMC, Samsung and Intel have the next biggest carbon footprints in the semiconductor industry, Priestley said. "As with most industries, carbon footprint is impacted by business size," he explained. "Emissions will scale with size and number of fabs so the bigger the semi vendor, the larger its carbon footprint will be."
The heavyweights of the industry told CNBC that they're taking actions to try to ensure they reduce their emissions as they scale up their operations.
The pledges come as the world looks to see what prime ministers and presidents commit to at the COP26 climate conference in Glasgow, U.K.
This summer, TSMC announced that it wants to reach net-zero emissions by 2050. It has also set a target of reaching 40% of renewable energy use company-wide by 2030.
That's not going to be easy given the make-up of Taiwan's energy mix. In 2019, 91.5% of Taiwan's primary energy was generated by fossil fuels, according data from BP's Statistical Review of World Energy report.
TSMC currently uses 4.8% of Taiwan's total power output and the figure is set to rise to 7.2% in 2022, according to Greenpeace.
Nina Kao, TSMC's deputy spokesperson, told CNBC that the company plans to purchase more renewable energy and carbon credits. It is also looking to improve the efficiency of the equipment in its factories and implement more energy conservation projects.
In July 2020, TSMC signed a 20-year deal with Orsted to buy the entire production of two offshore wind farms under development off Taiwan's west coast.
Samsung and Intel
Samsung's chip plants emitted 12.9 million tons of CO2 equivalents in 2020, making it the second-biggest carbon emitter in the semiconductor industry.
"We are constantly evaluating the environmental impact of GHG (greenhouse gas) emissions across the entire manufacturing cycle," a spokesperson for the company told CNBC, adding that the business is optimizing process technologies and materials as part of an effort to create its chips in an eco-friendly way. Samsung has not formally announced its own net-zero target but the firm is a critical part of South Korea's vision to become carbon-neutral by 2050.
Rival Intel has been praised for cutting its carbon emissions in recent years.
In 2020, the company produced 2.88 million tons of CO2 equivalent, despite consuming 10.6 billion kilowatt hours of energy worldwide. A single fab in Arizona used 561 million kilowatt-hours of energy in the first three months of 2021.
Fawn Bergen, corporate sustainability manager at Intel, told CNBC that "reducing operational energy use is core to Intel's overall climate strategy" and its 2030 goals.
Intel said 82% of its energy came from "green" sources like solar and geothermal in 2020.
The Santa Clara-headquartered chipmaker said it ran several projects last year that helped it to conserve 161 million kWh of energy. This year, similar projects will help it conserve an additional 125 million kWh of energy, Intel said.
Abishur Prakash, a geopolitical strategist at the Center for Innovating the Future, told CNBC that turning pledges into practice will be the hard part.
"What if India proposes that all new smartphones have to come from green factories by 2030?" he said.
"Another challenge is that companies themselves, like Apple, could set a goal," Prakash added. "But, meeting those goals will require having the supply chain — spread over multiple tiers — to also get on board and create their own ESG (environmental, social and corporate governance) strategies. That is not going to be easy."
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