Electrification Key to Semiconductor Growth Over Next Decade 

Mitigating emissions and decarbonizing energy supply chains through electrification is a leading strategy to reach net-zero greenhouse gas (GHG) goals. However, due to long equipment lifetimes and highly competitive markets, electrifying manufacturing operations is a massive challenge and tends to be slower than other sectors.

Semiconductor manufacturing is no exception. Although the industry is in the midst of a short-term sales decrease, substantial growth is projected over the next decade driven by continuing innovation in chip technology. Demand coming from leading edge applications, such as autonomous electric vehicles, artificial intelligence (AI), and the Internet of Things (IoT), is also a key growth driver.

Unfortunately, the semiconductor industry’s environmental footprint continues to widen as capacity expands to meet surging demand. While continuous advancements in chip capabilities propel global efforts to reduce emissions, semiconductor manufacturing still generates as much CO2 as half of all U.S. households.  

Manufacturing increasingly advanced semiconductors requires complex processes that consume more electricity and produce more emissions. So what’s the solution as the industry prepares for a booming decade ahead?  

CHIPS Act

In August 2022, Congress passed the Biden Administration’s CHIPS Act, containing $52 billion to strengthen the domestic semiconductor market. That figure includes roughly $39 billion for manufacturing incentives.

Since then, the Semiconductor Industry Association (SIA) has tracked more than 60 announcements of new semiconductor ecosystem projects in the U.S. and over $210 billion in new private investment. These initiatives are expected to create 44,000 new jobs, adding to the estimated two million existing chip jobs worldwide.

The CHIPS Act and resulting investments are expanding opportunities for semiconductor companies to intensify their sustainability efforts. In particular, electrification has become a key strategy for many leading manufacturers.

Minimizing Emissions

In the push toward electrification, semiconductor firms have been working for some time to minimize emissions created during the manufacturing process. Water conservation, such as programs to recycle and management practices to reduce water usage, is a top priority.

Meanwhile, energy-saving measures in fabrication facilities, including energy-efficient lighting and cooling systems and the use of renewable energy sources, help cut back on emissions from power generation.  

More recently, chipmakers have also begun targeting upstream emissions in the supply chain, which comprise about 40% of all carbon emissions within the industry.

Semiconductor Climate Consortium

Last November, the industry took a big step toward creating industry standards for reducing emissions by forming the Semiconductor Climate Consortium (SCC). As semiconductor companies look to integrate their entire supply chain into sustainability efforts, having visibility into environmental practices and carbon emissions is essential. 

Semiconductor companies are taking three primary actions to eliminate emissions from electricity generation given that it’s responsible for 83% percent of semiconductor device emissions.  

The first two are collaborative as chipmakers work closely with suppliers and users to source energy-efficient equipment, materials, and devices. Meanwhile, investing in energy-efficient manufacturing facilities is another area of focus for chipmakers seeking to reduce their footprint.

Together, these three action areas can address more than 80% of emissions in semiconductor manufacturing. However, again, the paradox is that as semiconductors become less expensive to use, consumers demand more of them. In turn, chipmakers are forced to scale their capacity—thus increasing their emissions.  

As the energy consumed by the chip sector increases, reducing emissions will soon demand an accelerated transition in the global electrical grid to low-carbon energy. To speed that transition, semiconductor companies and their suppliers must prioritize buying available low-carbon energy, investing in low-carbon onsite energy production, and advocating for a faster grid transition where semiconductors are manufactured and used.

Ultimately, solving the issue of emissions within the chip industry will require a well-coordinated approach. Even so, a push for greener semiconductors is sorely needed. Expect to see this issue remain a top priority for leading chipmakers around the world over the next decade.