Is Climate Change Threatening the Semiconductor Industry? [Juhyung Lim's Tech Talk]

Sudden Drought and Cold Wave Cause Water Shortage
Risk of Forced Suspension in Semiconductor Processes
TSMC Semiconductor Plant Uses 190,000 Tons of Water Daily
US, Taiwan, and Others Intensify Climate Change Response

Semiconductor production facility. / Photo by Yonhap News

[Asia Economy Reporter Lim Juhyung] Recently, the global demand for semiconductors has surged due to the rapid increase in smartphones, various electronic devices, and electric vehicles. In response, semiconductor manufacturers have ramped up production to meet demand, but now 'climate change' is hindering their efforts. Producing semiconductors requires tens of tons of water per factory per day, and sudden droughts and cold waves sweeping the globe have cut off water supplies to semiconductor plants.

◆Semiconductor Supply Shortage Triggered by the Spread of COVID-19

The semiconductor shortage is affecting not only the US, Europe, and Japan but also domestic electric vehicle production. According to US economic media such as The Wall Street Journal (WSJ), American automaker GM has suspended operations at its plants in Kansas and Ontario, Canada, since February.

Other automakers like Toyota, Volkswagen, Ford, and Renault have also recently halted or reduced production at their plants. Domestically, SsangYong Motor stopped vehicle production at its Pyeongtaek plant from the 8th to the 16th, and Hyundai Motor temporarily suspended operations at its Ulsan Plant 1, which produces the Ioniq 5 and Kona models.

The reason automakers are facing production disruptions is the semiconductor shortage. Modern vehicles are equipped with semiconductor components called MCUs (Microcontroller Units).

The shortage of 'MCU' (Microcontroller Unit), a semiconductor used in vehicles, is causing disruptions in the production of finished cars. / Photo by Yonhap News

In the past, MCU supply was never interrupted, but after the spread of COVID-19, global demand for gaming, IT platforms, and communication networks surged, causing an overall spike in semiconductor demand and resulting in a shortage of chips used in MCUs.

◆Semiconductor Plants Struggling with Drought and Cold Waves

Semiconductor production is handled by global manufacturers such as Taiwan's TSMC, US-based Micron, and South Korea's Samsung Electronics. These companies are accelerating production increases to keep up with soaring semiconductor demand.

However, a new 'obstacle' has recently emerged, hindering increased semiconductor production: climate change.

According to US financial media Bloomberg on the 25th of last month, Taiwan is currently facing its worst drought in decades, with reservoirs nearing depletion.

Taiwan typically experiences 3 to 4 typhoons annually, and the rain clouds generated by these typhoons play a crucial role in replenishing reservoirs. However, last year, due to abnormal weather, all typhoons bypassed Taiwan, leading to a severe drought since early this year.

Semiconductor fab (factory) of Taiwanese semiconductor foundry TSMC / Photo by Yonhap News

Accordingly, the Taiwanese government issued a red alert for water shortages for the first time in six years on the 24th and announced a 15% reduction in water supply to two major industrial complexes in Taichung County.

Taichung County is home to TSMC's factories, Taiwan's leading semiconductor foundry. The TSMC plant is currently using water stored in emergency tanks, but it warned that if the drought continues until May, actual production could be disrupted.

Taiwan is not the only place suffering from water shortages affecting semiconductor production. Samsung's semiconductor plant in Texas, which suffered significant damage from a sudden cold wave that swept across the US, also halted operations due to power and water outages.

According to local Texas media 'Austin Statesman,' although electricity was restored on the 19th of last month, the plant remains shut down because local rivers and water supply systems froze, cutting off water supply.

◆'Clean Water' Essential for Semiconductor Production

Water plays a critical role in semiconductor manufacturing. For example, TSMC, the world's largest semiconductor foundry, used a staggering 156,000 tons of industrial water per day as of 2019.

Semiconductor plants purify ordinary water through their own processes to produce 'ultra pure water.' Ultra pure water is highly refined water that filters out minerals, particles, and microorganisms.

Ultra pure water is used in processes such as cutting or washing wafers, which serve as the substrate for semiconductors. Semiconductor manufacturing requires nanometer (nm) scale processes smaller than the thickness of a human hair, so even tiny dust particles can cause defects. Therefore, washing surfaces with extremely pure water is essential.

◆Semiconductor Powerhouses Mobilize to Address Climate Crisis

Given these circumstances, semiconductor-producing countries are compelled to devote full efforts to resolving the climate change crisis.

Earlier, on the 26th of last month, Taiwanese President Tsai Ing-wen attended the groundbreaking ceremony for TSMC's new fab (factory) and stated, "Taiwanese semiconductor companies play a crucial role in the global supply chain," and pledged to "help resolve their water shortage issues."

The Taiwanese government plans to address the drought crisis by exploring and developing alternative water resources such as emergency wells and groundwater.

Artificial rainmaking is a technology that sprays substances that induce rain clouds into the air. The photo shows a domestic artificial rainmaking experiment conducted near the West Sea in the southwestern part of Gyeonggi Province in 2019. / Photo by Yonhap News

Additionally, Taiwan's Water Resources Agency is implementing measures such as artificially creating rain clouds to induce rainfall. On the 7th of last month, a Taiwanese Air Force C-130H military transport aircraft flew over northwestern Taoyuan, dispersing rain-inducing substances in various locations.

US President Joe Biden also announced a plan on the 31st of last month to invest approximately $2 trillion (3,352 trillion KRW) in clean energy, manufacturing, housing, and infrastructure as part of climate change countermeasures. The plan focuses on investing in carbon-free power generation facilities such as wind and solar power and establishing power grids resilient to extreme weather like severe cold.

In a speech in Pittsburgh, Pennsylvania, President Biden emphasized, "This plan will be our transformational progress against climate change," adding, "America's power grid will be modernized to withstand harsh climates and become completely clean."