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Supplement: Semiconductors


Meeting chip demand and decarbonising semiconductors go hand in hand


By Henri Berthe, semiconductor vice president, Schneider Electric T


he semiconductor business is critical in today's increasingly digital world. Its technologies are vital to everyday life, including the computers and mobile phones we use to communicate, transportation that allows us to move, the equipment that helps us detect and cure illnesses, and the grid systems that keep our cities operating. Essentially, there is no future version of reality in which semiconductors do not exist. However, their widespread use creates new environmental issues.


The environmental effect of semiconductors


To meet demand, semiconductor players are extending existing capacities of fabrication plants (FABS), which can use as much as 100 megawatt-hours of power each hour — more than many automotive plants or oil refineries. This massive amount of electricity consumption will result in significant waste generation, greenhouse gas emissions and large carbon footprint. In 2020, the industry emitted a staggering 41 million tons of CO2, equivalent to the annual emissions of five million homes. And by 2030, semiconductor manufacturing is projected to consume 237 TWh of electricity globally, according to Greenpeace, which is roughly the same as Australia’s total electricity consumption in 2021.


As electronics grow in importance, manufacturers must navigate concerns around energy consumption and sustainability. Recent McKinsey research finds that major semiconductor companies’ latest commitments are still falling short of what is required under the 2016 Paris Agreement. As a result, firms who fail to make their operations more sustainable may face stronger laws and penalties from


42 May 2024


future governments, as well as fewer orders from increasingly environmentally sensitive customers. Conversely, those who optimise their energy efficiency early will unlock considerable resource savings and huge opportunities for growth.


To protect their businesses’ futures, it is essential for manufacturers to start establishing sustainable practices today.


Sustainability through resilience In addition to these environmental concerns, many manufacturers are still dealing with the aftermath of the global semiconductor crisis. A ‘perfect storm’ of global events almost brought production to a standstill throughout the pandemic: COVID-19’s lockdowns both accelerated demand for consumer electronics and closed the factories producing the required


Components in Electronics


components. Meanwhile, the China– United States trade war, Russia–Ukraine war, severe weather events, production facility fires, and a general reliance on semiconductor imports, rather than domestic manufacturing, also contributed to the sustained scarcity.


At the height of the chip shortage, research found that as many as 169 industries were impacted worldwide. The consumer electronics and automotive sectors were perhaps the hardest hit. PlayStation 5 consoles became akin to gold dust and Apple slashed its iPhone manufacturing targets, while Toyota reduced car manufacturing by 40 per cent and General Motors paused vehicle production across North American plants. Overall, the shortage cost the auto industry as much as $210 billion


in revenue in 2021. And though manufacturers have now adapted to a constrained supply, increasingly complex products, such as electric vehicles with advanced safety and autonomy systems, will continue to accelerate semiconductor demand and spark a significant change in the manufacturing landscape.


As semiconductor production has been concentrated in Asia for the past ten years, organisations and countries are now looking to create more diverse, resilient supply chains. In October 2022, the US government administered export control rules to constrain China’s production of the world’s most advanced chips. Meanwhile, the EU also intends to become a significant player through the European Chips Act. As investments shift from APAC to North America and Europe, manufacturers must


www.cieonline.co.uk


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