TSCM already consumes 6% of the energy in all of Taiwan. And it’s a problem for the chip industry

In its search for ever smaller, more precise and more efficient semiconductors, the technology industry has reached a scenario that sounds almost like science fiction: companies that consume more energy than an entire country with tens of millions of inhabitants. It does not happen with all firms, nor can the comparison be made with any nation, of course; but the data, beyond the anecdotal, gives a clue as to the extent to which the sector can pose an energy and environmental challenge.

The case of TSMC and Sri Lanka. The giant Taiwan Semiconductor Manufacturing (TSMC), the large supplier of semiconductors, offers a case as peculiar as it is worthy of study. The considerable amount of energy it needs to sustain its production will take it in 2025 —reveals Bloomberg— to account for around 12.5% ​​of Taiwan’s energy consumption, which is more than double what it accounted for two years ago (6%). Its demand will be so high that soon TSMC is expected to consume as much or even more than the 21 million inhabitants of Sri Lanka.

And what is the reason? To a large extent, the search for the increasingly smaller, more complex and more efficient semiconductors demanded by the industry. TSMC is one of the giants in the sector. So much so that at the beginning of the year it accounted for 54% of the global market, with clients of the caliber of AMD, NVIDIA or Apple, among many other large companies. To understand the trend of your energy demand, however, it is essential to become familiar with a concept: extreme ultraviolet lithography (EUV), a technology that is not new, but is gaining more and more weight.

EUV equipment is primarily used to translate smaller and smaller geometric patterns onto the surfaces of semiconductor wafers, which requires tremendous precision. The machines manufactured by the Dutch company ASML for this task are expensive and complex, and to use them, firms such as TSMC require high energy consumption. Bloomberg specifies that each machine consumes a megawatt of electricity, about 10 times more than previous generations. In addition to TSMC, Samsung or Intel, among other manufacturers, they have EUV equipment.

A change with an energy footprint. The million dollar question is: How does an increasingly demanding semiconductor industry that requires large amounts of electricity affect the country’s energy demand? In Taiwan there are experts who already warn that, unless the manufacturers provide themselves with their plants, the country will not have enough capacity to serve its industry.

Moreover, they do not rule out that this year the island’s operational reserve will be below the level that the Taiwanese authorities consider “adequate”. Although the sector is key in the country, one of the concerns it generates is how it will affect other branches of its economy. The backdrop is just as essential and is marked by the energy crisis and the transition to green energy. In places like Taiwan, where chip manufacturing is so energy intensive, the lack of alternatives to bolster supply can be challenging in the short term.

Where does the energy come from? That is the other big question on the table: Where does the energy come from? To what extent can it affect decarbonization policies? Could it make it difficult for Asia to reduce its emissions? Despite its plans to reinforce the weight of “green energy”, in the case of Taiwan fossil fuels still play an essential role: in 2021 it was estimated that barely 6% of its energy came from renewables and the objective of the authorities is to move by 15% in a matter of three years, below the mark that it had already given itself in 2016.

The situation is not very different in South Korea, where Samsung accounts for 3% of energy consumption and more than half of electricity comes from burning coal and natural gas.

Via | Bloomberg

Cover image | TSMC