Hsinchu, Taiwan – A crane flies across a silent rice field, water flowing slowly in the background. It is a quiet, stereotypical image of rural East Asia. There doesn’t seem to be much to suggest that I’m just a few kilometers away from one of the hearts of the global economy.
This is Hsinchu City, a small city close to Taipei in Taiwan. This is what we can literally call the Silicon Valley of the world.
Just a few kilometers away from the tranquil rice fields, huge buildings rise from the ground, the air conditioning constantly running amidst the hustle and bustle of traffic. These are the factories that make the silicon or semiconductor chips that make our smartphones, computers, and even artificial intelligence (AI) systems like ChatGPT work.
However, these two worlds, tranquil nature and high-tech industrialization, increasingly collide on the island.
Taiwan is the world leader in the production of computer chips.
Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) is the largest chip manufacturer in Taiwan. By the third quarter of 2024, it had captured 64% of the global semiconductor market, according to research firm Counterpoint.
The second largest company, Samsung Foundry in South Korea, represented only 12 percent.
Chip manufacturing makes up a large part of Taiwan’s economy and contributes 25 percent of the island’s GDP. In 2020, TSMC’s market capitalization was the size of half of Taiwan’s economy, according to a study conducted at the time.
Few countries seem able to outdo the Taiwanese in chip manufacturing. However, this success in semiconductors also raises issues of sustainability.
Chip manufacturing consumes large amounts of water and energy, and emits emissions through chemicals. TSMC alone consumes about 8 percent of the island’s electricity, according to a recent report from S&P Global Ratings.
“After the petrochemical industry, the electronics industry is the largest source of emissions in Taiwan,” Chia-Wei Chow, research director at the non-profit Taiwan Climate Action Network and adjunct assistant professor at National Taiwan University, told Al Jazeera.
“Semiconductors are also a rapidly growing industry, which is concerning, to say the least.”
This puts them in conflict with farmers near whom Taiwanese chip factories are located.
In 2021, during a drought, the Taiwanese government stopped irrigating farms, so that huge chip factories could use the saved water. Today, there is growing concern about how solar farms, needed to power chip manufacturing, could take over farmland.
“There appears to be a lack of systematic analysis on the environmental impacts on semiconductor production,” Josh Lebowski, a professor of geography at Memorial University in Newfoundland, Canada, told Al Jazeera.
“This is a huge mistake.”
“Crazy” artificial intelligence.
While water use in chip factories has received a lot of international attention in the past few years, on the island itself it is considered old news. Semiconductor manufacturers already recycle most of the water they use, and the government has invested in more water infrastructure since the drought of recent years.
Today, Taiwanese are concerned about energy use in industry. AI has made major breakthroughs in recent years, driven by large language models from US companies like OpenAI and tools like ChatGPT. This revolution was fueled by chips, most of which were manufactured in Taiwan.
The hype around artificial intelligence, in turn, is causing massive chip factories in Taiwan to become more active.
“The AI market is crazier than ever,” Lena Zhang, an activist with Greenpeace East Asia, told Al Jazeera.
“For this reason, energy use in the semiconductor industry has become a major problem for Taiwan, due to increased emissions and even potential shortages.”
In all this madness, climate may have been forgotten. “The main goal now is to develop artificial intelligence and related supply chains,” Zhang said.
“Energy is not a major concern. The government should be more active in developing sustainable energy.
Slow renewable energy sources
One of the main issues here is the Taiwanese energy market. Taiwan is currently phasing out its nuclear reactors. However, the construction of solar and wind energy is still lagging behind.
“Taiwan still relies heavily on fossil fuels,” Chang said. “More than 80% of our energy supply comes from gas and coal.”
According to the Department of Energy, only 11% of Taiwan’s energy supply between September 2023 and August 2024 came from wind, solar and hydropower.
The decline in the share of nuclear power contributed another 5.6 percent.
In 2016, the Taiwanese government set a goal of 20% renewables by 2025, which it will almost certainly fail.
Offshore wind, for example, is lagging behind government targets. In 2018, Taiwan awarded 5.7 gigawatts of offshore wind capacity to be installed by 2025.
By 2024, the government has lowered its targets, and hopes to have between 2.56 GW and 3.04 GW ready that year.
“Offshore wind power went well until 2022. But then, in the following auction rounds, Taiwan tried to get cheap power and high localization of the supply chain,” said Raoul Kubitschek, managing director of renewable energy consultancy NIRAS Taiwan. The island.
Wind energy is particularly involved in the localization rules in Taiwan. The Taiwan government requires that very high proportions of wind turbines and other components be produced domestically.
However, this local production is not improving fast enough.
“You can’t build a new supply chain that quickly,” Kubitschek said. “Taiwan built its first commercial-sized offshore wind farm only in 2017. It takes time to establish a domestic wind energy industry.”
Solar energy also faces obstacles. Rooftop solar has been largely saturated on the island. Large-scale solar farms are also controversial due to land disputes. Groups such as farmers fear encroachment on farmland, leading to protests and lawsuits.
Chia-wei Chao hopes to change this situation.
He is leading some pilot projects where farmers themselves place solar panels on their land. “We should not force farmers to sell their land or stop farming to install solar panels,” Zhao told Al Jazeera. “We should allow a combination of both. We need to regain the confidence of farmers.
But for now, Taiwan’s energy market remains dependent on fossil fuels. At the same time, energy use in the semiconductor industry is growing rapidly.
This is a problem for semiconductor manufacturers. They are under pressure from their customers to go green.
Apple, a prominent buyer of TSMC chips, wants its major suppliers to commit to using 100% renewable energy by 2030 — an unattainable goal given current trends.
Electricity prices in Taiwan are also increasing rapidly, and threats of power outages are increasing.
According to Kubitschek, broader changes are needed in Taiwan’s energy market, including easing localization policies, reforming permits and considering the role of government-owned energy company Taipower.
However, Kubitschek says such reforms may be a long way off. Meanwhile, Greenpeace wants to move past this dilemma and is demanding that companies like TSMC build their own sustainable energy facilities.
Potato chips business
However, the problems Taiwan faces with semiconductor manufacturing are not unique.
Since Covid-19 and associated shortages of vital goods such as semiconductors, governments such as the US and EU want to manufacture more chips domestically.
Both the United States and the European Union have passed legislation to support domestic chip production, although US President-elect Donald Trump has strongly criticized his country’s chip and science law.
Both the United States and the European Union now face issues similar to those faced by Taiwan.
In the United States, for example, new chip factories are being built in drought-prone areas. TSMC is investing $12 billion in a factory in the desert areas of Arizona.
This is bad planning, according to Lebowski of Memorial University of Newfoundland.
“the [US] The CHIPS Act did not take into account water use. “This will cause problems in the future.”
In Europe, concerns are also growing about the environmental impacts of chip manufacturing.
In 2022, the European Union announced that it wanted to increase Europe’s share of the global semiconductor manufacturing market to 20 percent by 2030, prompting TSMC and Intel to unveil plans for new factories in Germany and Poland (Intel has since postponed its plans in its pursuit To curb huge financial losses.
According to a study by Interface Research, if Europe can achieve the 20% production target, semiconductor emissions on the continent will rise eight-fold, contradicting other political programs such as the Green Deal.
Chip gases
Researchers are also concerned about another type of climate impact of semiconductors.
Besides using water or energy, semiconductor manufacturing produces greenhouse gases. During a complex manufacturing flow, the processes themselves can produce their own emissions.
These emissions are called Scope 1, according to Emily Gallagher, director of the Sustainable Semiconductor Technologies and Systems (SSTS) program at the Imec research institute in Belgium. TSMC is a member company of Imec’s SSTS program.
“During the etching process, we use plasma to selectively remove material to build small structures in the chips. The etching process often uses gases such as the fluorinated chemical CF4,” Gallagher told Al Jazeera. “CF4 has a global warming potential 6,500 times greater than carbon dioxide.”
According to Imec’s calculations, for an average chip, approximately 10 percent of production emissions are in Band 1. Reducing these emissions means adapting highly complex semiconductor manufacturing procedures by increasing process efficiency to increase gas utilization, by replacing existing gases Possible. And by reducing its use.
“Currently, Scope 1 emissions do not dominate emissions associated with semiconductor manufacturing,” Gallagher said. “But as factories decarbonize their energy supplies, their importance will increase dramatically.”
Back in Taiwan, energy use is still on everyone’s mind.
Taiwan is at the heart of the global AI hype: not only does it produce chips, it even makes the systems that cool the high-performance servers on which the AI models are trained. It remains to be seen whether the domestic energy market can handle this.
“We need more ambitious goals and the means to achieve them,” Zhang said. “There is real concern now about energy shortages. Large energy users, such as semiconductor companies, have to take responsibility.
This article was supported by the Pascal Decros Fund.
