The pressing need for sustainability in the chip industry
- Achieving substantial emission reductions will require collaboration with peers and suppliers, as well as new technologies, according to Schneider Electric.
- To top it off, as the node size of chips continues to shrink, energy requirements at production facilities are expected to rise significantly — making sustainability a business imperative for semiconductor players.
Global demand for semiconductors has been surging while industry players are actively increasing capacity and output. However, all that expansion comes at a cost and the reality is that chip making is a hugely resource-intensive business. In a conversation with an industry leader from Schneider Electric recently revealed that the most advanced chipmakers now have a larger carbon footprint than some traditionally more polluting industries — like the vehicle industry.
For context, large semiconductor fabs can consume electricity at 100 MW/hour – enough to power 50,000 houses, according to SEMI, the global industry association that unites the entire electronics manufacturing and design supply chain. To top it off, a single fab can use up to nine million gallons of water per day. Considering all that, SEMI said with more than 70 new fabs expected to come online over the next few years, urgent action to keep up with sustainability pledges are needed.
At SEMICON Southeast Asia 2022, Tech Wire Asia had the opportunity to speak with Dallal Slimani, VP in the semiconductor segment of Schneider Electric, discussing the most heated topic during the three-day conference — sustainability within the chip industry. During the industry’s largest gathering, leaders discussed the increasing energy consumption in semiconductor facilities as chips evolve to be more complex.
What does sustainability within the semiconductor industry mean, and how are they doing compared to other industries?
So just before getting into the semiconductor industry, I think it’s important to take a step back and look at some data points. So when we look at the global CO2 emissions, we see that industries in general are responsible for 30% of it. That is a very close second after buildings (35%) and we also see that 80% of the global CO2 emissions are coming from power generation or power consumption.
And as you may know, the semiconductor industry is a very, very high energy intensive industry. They are heavy users of water, gas and chemicals, which means they have their fair share of responsibility in the global CO2 footprint. So this is definitely a big concern that the industry has to focus on. We also see that there are semiconductor fabs exceeding some automakers in terms of CO2 footprint — in short, a lot going on within the industry.
Now, the good news and something that I have seen emphasized during this year’s SEMICON SEA, is that there is a growing concern for sustainability and the economic focus on it. More and more companies are making commitments for 100% renewable or net zero targets. Even Taiwan’s TSMC is announcing that they are moving towards the green fabs for the future. However, there is a lot going on within the industry, we also need to make sure that companies are moving towards the right direction and that there are real actions that translate into CO2 footprint reductions.
Do you think companies have put in enough effort in terms of setting their goals?
There are definitely enough companies setting the goals. I will not put numbers because there are new companies setting commitments daily but if you compare to other industries in terms of the Science Based Targets initiative (SBTi), the share is pretty low for the semiconductor industry. I, however, really expect it to grow. It’s not enough to just set ambitions. You know, here also, if we look at some data points, 30% of companies globally across all industries fail to deliver their scope one and two targets that they set for 2020. So there is a real struggle, the company’s in order to deliver on their sustainability commitment.
So this is why it’s very important to make sure that sustainability has to be within the C suites itself, and we need to make sure that it is not separated as sustainability strategy and business strategy. Sustainability is part of your business strategy and this is why it is very important to make sure that you start with some professional guidance with companies that have delivered on their own sustainability roadmap, that have decarbonized their own supply chains.
How do you ensure that companies actually keep up to the end goal?
I would say that they need to start by using professional guidance from companies that have delivered. Let’s take Schneider Electric for an example — we drove the transformation in our supply chain and sustainability is not a new topic for us. We started more than 15 years ago, and we have been consistently delivering on our commitments. We have been recognized as one of the most sustainable companies in the world and we have taken obviously, more challenging commitments, we want to be net zero on scope one, two and three by 2050.
No doubt, Schneider Electric has different milestones and in order to get there. We are also looking at scope four whereby we help our customers to reduce their CO2 footprint; we are aiming to help our customers to reduce more than 800 million tonnes of CO2 on top of helping them build their strategy that can be translated into business imperatives. On top of that, we are helping them to make sure that sustainability is one of the criteria for investments and decision making.
How else is Schneider Electric assisting their customers to achieve their sustainability goals?
We are helping them build their baseline as they need to know where they are starting, and how to measure their progress. Schneider Electric also brings end to end tools, digital tools that will give them visibility as to how they are using their powers. We also bring insights thanks to analytics and machine learning that will allow customers to drive further energy reduction. Our customers are also guided with ways to study their energy mix; from how to introduce more renewables to moving towards 100% renewables. As of this point, we are managing around US$30 billion of energy contracts and Schneider Electric has the biggest platform worldwide for access to renewable energy.
Tell us more about this renewable energy platform.
The Neo network is a community of value chain players in renewable energy that is facilitated by Schneider Electric. It brings together people who are in need of access to renewable energy and the people who are able to bring projects for renewable as well as some startups. All of which drives collaboration and innovation which is a key for us.
When you look at the decarbonization of the semiconductor industry, it’s not a topic, it’s not something that one company can achieve alone. It requires across the border, across the value chain, and even sometimes governments collaboration in order to go towards a greener future for the semiconductor industry. So more collaboration is the way forward.
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