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Tech-Op-ed August 2025 SOUNDING OFF


By Michael Skinner Editor


grow in complexity and capability, so too does their appetite for energy — a trend with profound implications for the electronics sector. Modern AI, especially large-scale deep learning models like gen-


The Energy Cost of AI A


erative AI systems and advanced computer vision networks, demands immense computational power. Training large neural networks can require hundreds of megawatt-hours of electricity, sometimes equat- ing to the annual consumption of dozens of U.S. households. Once trained, deploying these models across cloud services or edge devices also consumes significant ongoing energy for inference tasks. This rising energy demand contributes to higher operational costs, in- creased greenhouse gas emissions, and pressure on energy grids — factors that electronics manufacturers cannot ignore. For electronics manufacturing, the energy cost of AI impacts op-


erations in several critical ways. First, manufacturers themselves in- creasingly deploy AI tools for process optimization, quality inspec- tion, predictive maintenance, and supply chain management. While these applications drive efficiency, they also necessitate investing in powerful hardware infrastructure —GPUs, AI accelerators, and high- performance computing clusters — which not only carry financial costs but also have high energy footprints. Manufacturers striving for sustainability may find their gains offset if AI-driven improvements in yield and productivity lead to substantially higher power use. Second, the trend toward embedding AI capabilities into end-


user devices — from smartphones and wearables to industrial IoT sensors — poses a new set of energy challenges. Integrating AI re- quires more powerful processors, specialized AI chips, and enhanced memory and storage capacity. All these components contribute to higher energy consumption during both manufacturing and end-use operation. Electronics makers must balance market demand for AI features with the pressure to reduce device power consumption, espe- cially as regulators tighten energy efficiency standards and con- sumers grow more sustainability-conscious. Moreover, the environmental footprint of manufacturing AI


hardware itself is significant. Producing advanced semiconductors for AI workloads often involves extremely energy-intensive processes, in- cluding the fabrication of high-density chips in cutting-edge nodes be- low 5nm. This escalates energy demands not only for chipmakers but for the broader electronics supply chain, from materials suppliers to assembly facilities. As sustainability becomes a core competitive dif- ferentiator, electronics manufacturers face mounting scrutiny over the full lifecycle impacts of their products, including the energy tied to AI capabilities. Nevertheless, AI also offers solutions to mitigate its own energy


burden. AI-driven process control can reduce scrap and optimize re- source use in electronics manufacturing, improving sustainability metrics. AI is also helping design more energy-efficient chips through sophisticated modeling and optimization. Innovations like neuromor- phic computing, edge AI, and quantized models promise lower power consumption, opening pathways for greener AI applications. The energy cost of AI is thus a double-edged sword for electron-


ics manufacturing. While AI fuels new capabilities and operational gains, its escalating energy demands pose significant economic and environmental challenges. Balancing AI’s transformative power with sustainable practices will be pivotal for electronics manufacturers seeking to remain competitive and responsible in a rapidly evolving technological landscape. r


rtificial Intelligence (AI) has rapidly evolved from a futuristic vi- sion to an indispensable driver of innovation across industries, including electronics manufacturing. However, as AI systems


PUBLISHER’S NOTE


By Jacob Fattal Publisher


fited significantly from the CHIPS and Science Act of 2022. This leg- islation has fueled over $200 billion in new investments, leading to the construction of advanced fabrication facilities by global giants such as TSMC in Arizona and Samsung in Texas. As a result, U.S. chip sales, valued at $627 billion in 2024, are projected to reach $697 billion in 2025. Despite this momentum, domestic production costs remain 50 to 100% higher than in East Asia, constrained further by regulatory complexities and a shortage of skilled labor. Alongside semiconductor advances, the broader electronics sec-


Industry Resilience E


tor is increasingly focused on reshoring production to mitigate geopo- litical risks and improve supply chain resilience. Many original equipment manufacturers (OEMs) are shifting sourcing closer to home, yet challenges persist. Component shortages, particularly for semiconductors and passive devices, continue to disrupt manufactur- ing schedules despite companies holding elevated inventory levels to cushion against future supply shocks. Inflation also weighs heavily on the industry. Rising costs of es-


sential raw materials such as copper and silver, coupled with labor expenses growing by approximately 3.3%, squeeze profit margins for manufacturers. Simultaneously, regulatory uncertainties remain high. Ongoing tariff investigations and export controls, especially tar- geting technology flows to China, add complexity and potential cost increases for firms navigating global markets. Industry leaders, in- cluding ASML, warn that tariffs could drive up the cost of critical fab- rication equipment, delaying projects and dampening competitive- ness.


In sum, while the U.S. electronics manufacturing sector is re-


gaining ground through strategic investments and technological in- novation, it faces significant hurdles in costs, policy stability, and supply chain volatility. Continued progress will depend on cohesive government support, workforce development, and the ability to bal- ance global interdependence with do- mestic resilience. r


lectronics manufacturing in the United States is experiencing a dynamic period of growth and transition. Central to this transformation is the semiconductor industry, which has bene-


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