Hsinchu, Taiwan – A crane bird flies over a quiet rice field, with water trickling slowly in the background. It is a calm and stereotypical image of an East Asian landscape. There is little to suggest that I am just a few miles from one of the hearts of the global economy.
This is Hsinchu, a small city near Taipei in Taiwan. You could literally call it the Silicon Valley of the world.
Just a few kilometers from the quiet rice fields, gigantic buildings rise out of the ground, the air conditioning constantly humming above the hustle and bustle of traffic. These are the factories that make the silicon chips, or semiconductors, that make our smartphones, computers, and even artificial intelligence (AI) systems like ChatGPT work.
But these two worlds, tranquil nature and high-tech manufacturing, are increasingly colliding on the island.
Taiwan is the world leader in computer chip manufacturing.
Taiwan Semiconductor Manufacturing Company Limited (TSMC) is the largest chip manufacturer in Taiwan. It had captured 64 percent of the global semiconductor market by the third quarter of 2024, according to research firm Counterpoint.
The second largest player, the South Korean Samsung Foundry, only achieved just under 12 percent.
Chip manufacturing makes up an outsized portion of Taiwan’s economy, contributing 25 percent of the island’s gross domestic product (GDP). According to a study at the time, TSMC’s market value in 2020 was equivalent to the size of half of Taiwan’s economy.
Few countries seem capable of surpassing Taiwan in chip manufacturing. However, this semiconductor success also raises questions about sustainability.
Chip manufacturing uses large amounts of water and energy and emits chemical emissions. According to a recent report from S&P Global Ratings, TSMC alone consumes about 8 percent of the island’s electricity.
“After the petrochemical industry, the electronics industry is Taiwan’s largest emitter,” Chia-Wei Chao, research director at the nonprofit Taiwan Climate Action Network and adjunct assistant professor at National Taiwan University, told Al Jazeera.
“Semiconductors are also a fast-growing industry, which is concerning to say the least.”
This even brings them into conflict with the farmers near whom Taiwan’s chip factories are located.
In 2021, the Taiwanese government stopped irrigating farms during a drought so its giant chip factories could use the saved water. Today, there is growing concern about how solar farms needed for chip manufacturing could take up farmland.
“There seems to be a lack of systemic analysis of the environmental impacts on semiconductor production,” Josh Lepawsky, a professor of geography at the Memorial University of Newfoundland in Canada, told Al Jazeera.
“This is a serious mistake.”
“Crazy” AI
While water use by chip factories has received a lot of international attention in recent years, it is considered old news on the island itself. Semiconductor manufacturers already recycle most of the water they use, and the government has invested in more water infrastructure since last year’s drought.
Taiwanese people today are concerned about industrial energy consumption. Artificial intelligence has made major breakthroughs in recent years, driven by major language models from US companies like OpenAI and tools like ChatGPT. This revolution was driven by chips, most of which were manufactured in Taiwan.
The AI hype, in turn, is pushing Taiwan’s huge chip factories into high gear.
“The AI market is getting crazier than ever,” Lena Chang, activist at Greenpeace East Asia, told Al Jazeera.
“For this reason, the energy consumption of the semiconductor industry is becoming a major problem for Taiwan due to increased emissions and possible shortages.”
With all the madness, people might have forgotten about the climate. “The main goal now is to develop AI and related supply chains,” Chang said.
“Energy is not a big problem. The government should be more active in developing sustainable energy.”
Slow renewable energy
A central topic here is the Taiwanese energy market. Taiwan is currently dismantling its nuclear reactors. However, the construction of solar and wind energy is lagging behind.
“Taiwan still relies heavily on fossil fuels,” Chang said. “More than 80 percent of our energy supply comes from gas and coal.”
According to the Energy Administration, between September 2023 and August 2024, only 11 percent of Taiwan’s energy supply came from wind, solar and hydropower.
A declining proportion of atoms contributed another 5.6 percent.
In 2016, the Taiwanese government set a goal of reaching 20 percent renewable energy by 2025, which it will almost certainly miss.
For example, offshore wind energy is lagging behind the government’s targets. In 2018, Taiwan approved the installation of 5.7 gigawatts (GW) of offshore wind energy by 2025.
By 2024, the government had downgraded its targets and hoped between 2.56 GW and 3.04 GW would be ready that year.
“Offshore wind power did quite well until 2022. But then in subsequent auction rounds, Taiwan tried to get both cheap energy and high supply chain localization,” Raoul Kubitschek, managing director of renewable energy consultancy NIRAS Taiwan, told Al Jazeera.
Wind energy in particular violates Taiwan’s localization rules. Taiwan’s government requires that a very high proportion of its wind turbines and other components be manufactured locally.
However, this local production is not increasing fast enough.
“You can’t build a new supply chain that quickly,” said Kubitschek. “Taiwan only built its first commercial offshore wind farm in 2017. It takes time to build a domestic wind energy industry.”
Solar energy also has its limits. Rooftop solar energy is largely utilized on the island. Larger solar parks, on the other hand, are controversial due to land disputes. Groups such as farmers fear they could encroach on farmland, prompting protests and lawsuits.
Chia-wei Chao hopes to turn things around.
He is leading some pilot projects in which farmers place solar panels on their land themselves. “We should not force farmers to sell their land or stop farming to install solar panels,” Chao told Al Jazeera. “We should allow a combination of both. We have to regain the trust of farmers.”
However, currently Taiwan’s energy market continues to rely on fossil fuels. At the same time, energy consumption in the semiconductor industry is increasing rapidly.
This is a problem for semiconductor manufacturers. They are under pressure from their customers to become more environmentally friendly.
Apple, a major buyer of TSMC chips, wants its major suppliers to commit to 100 percent renewable energy use by 2030 – a goal that seems distant given current trends.
Electricity prices in Taiwan are also rising rapidly and the risk of power outages is increasing.
Kubitschek said broader changes are needed in Taiwan’s energy market, including easing localization policies, reforming licensing procedures and reviewing the role of Taipower, the state-owned energy company.
However, Kubitschek says such reforms could still be a long way off. Greenpeace now wants to get around this conundrum and is demanding that companies like TSMC build their own sustainable energy plants.
CHIPS laws
However, Taiwan’s problems with semiconductor manufacturing are not unique.
Since COVID-19 and the associated shortages of critical goods like semiconductors, governments like the United States and the European Union are looking to produce more chips locally.
Both the US and EU have passed legislation to support domestic chip production, although US President-elect Donald Trump has sharply criticized his country’s CHIPS and Science Act.
Both the US and the EU are currently facing similar problems to Taiwan.
In the USA, for example, new chip factories are being built in drought-prone areas. TSMC is investing $12 billion in a factory in the desert regions of Arizona.
According to Lepawsky of the Memorial University of Newfoundland, this is bad planning.
“The (US) CHIPS Act did not take water use into account. This will cause problems in the future.”
Concerns about the environmental impact of chip manufacturing are also increasing in Europe.
In 2022, the EU announced it would 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 as planned). contain severe financial losses).
According to a study by research firm Interface, if Europe met its 20 percent production target, the continent’s semiconductor emissions would increase eightfold, which would contradict other policy programs such as the Green Deal.
chip gases
Researchers also worry about a different kind of climate effect from semiconductors.
In addition to water and energy consumption, semiconductor production also produces greenhouse gases. During the complex manufacturing process, the processes themselves can generate their own emissions.
According to Emily Gallagher, director of the Sustainable Semiconductor Technologies and Systems (SSTS) program at the Imec research institute in Belgium, these are called Scope 1 emissions. TSMC is one of the companies that is a member of Imec’s SSTS program.
“During the etching process, we use plasma to selectively remove material to build tiny structures in 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 CO2.”
According to Imec calculations, around 10 percent of production emissions for an average chip fall into Scope 1. In order to reduce these, the highly complex semiconductor manufacturing processes must be adapted by increasing process efficiency in order to increase the utilization of gases, if possible by replacing existing gases and by reducing their use.
“Right now, 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.”
In Taiwan, energy consumption is still on everyone’s lips.
Taiwan is at the center of the global AI hype, not only making chips but even producing the systems that cool the hot-running servers on which AI models are trained. Whether the local energy market can handle this remains to be seen.
“We need more ambitious goals and the means to achieve them,” Chang said. “There is a real concern at the moment about electricity shortages. Large electricity consumers such as semiconductor companies must take responsibility.”
This article was supported by the Pascal Decroos Fund.
