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Inadequate access to renewable energy in its home markets has left Asia’s biggest chip makers behind their US and European rivals in the race to cut carbon emissions.
Making chips, especially cutting edge chips, is extremely energy intensive. But Taiwan Semiconductor Manufacturing, the world’s biggest contract chip maker, and Samsung Electronics, the world’s biggest memory-chip maker, are struggling to reduce their domestic carbon footprint.
TSMC President Mark Liu said at the company’s annual general meeting that Taiwan’s slowness in developing renewable energy is holding the company back from its environmental goals.
“Our overseas sites in the US and China have already completely switched to green energy,” Liu said. “However, we have not yet moved forward to use more green energy in Taiwan. The reality is that Taiwan doesn’t have enough green energy for us to use.”
Liu said industry-wide efforts to adopt renewable energy have accelerated recently, especially since the Russian invasion of Ukraine. “There is competition among all economies to develop green energy, from the US to Japan to Europe,” the president said. The war, which began in February last year, caused turmoil in energy markets, as Russia was a major exporter of oil and natural gas.
A Samsung Electronics chip plant in Pyeongtaek, South Korea. Manufacturers are under pressure to adopt greener manufacturing processes © Samsung Electronics/Reuters
Meanwhile, Samsung cited the consensus view of members of the RE100, a global renewable energy initiative for corporations, that South Korea is one of the most challenging countries in the world to source renewable energy because of limited purchase options for companies.
Samsung’s smaller rival SK Hynix said renewables would account for just 4 percent of total use in 2021, while Japan’s Kioxia’s figure for the 12 months to March 2022 was just 0.02 percent.
Chips manufactured in Asia will be less green than those produced in the US and Europe as a result of limited sources of renewable energy, which customers are concerned about.
Doris Su, president and chief executive of Global Wafers, the world’s third-largest wafer materials maker, said there is growing demand from customers, especially European chip makers, to buy wafers produced from green energy. GlobalWafers has manufacturing facilities in nine countries in Asia, the Americas and Europe.
“This will be a long-term trend and will affect the competitiveness of the company. Whether your energy is green enough may become the deciding factor on whether you can get orders in the future,” Hsu said. “Customers will compare price, quality and whether or not your energy source is green.”
But HSU said sourcing enough renewable energy was challenging in Taiwan, Japan and South Korea. “All these places are heavily populated and it is not easy to get enough land or roof space for renewable sources like solar farms,” he said.
“In most Asian countries, access to wind and solar power is limited,” said an executive of the South Korean chip industry. “Obtaining renewable energy from other countries is also not easy due to geographic and diplomatic boundaries.”
Samsung, TSMC and SK Hynix have pledged to use 100 percent renewable energy for global operations by 2050, while US chipmaker Intel and Europe’s Infineon and STMicroelectronics aim for 2030, according to a Nikkei Asia analysis of company disclosures. This is the goal to be reached before. Top Japanese chip makers Kioxia and Sony have both committed to using renewable energy entirely by 2040, later than their Western counterparts.
The lack of renewable energy could impact Asian chipmakers’ road map to reach net zero emissions. According to the company, electricity use accounts for 62 percent of TSMC’s carbon emissions. Liu said the company is evaluating ways to move the deadline forward and aim to achieve 100 percent green energy use between 2030 and 2050.
The race to go green begins as leading economies push to shore up critical semiconductor production in a strategy that includes persuading top Asian chip makers to expand chip plants beyond their home soil.
Chip makers and analysts said a low energy mix in renewables and the lack of mature, recognized renewable energy certifications in the region are two factors holding back Asia’s chip industry from green operations.
A beach near the Volseong Nuclear Power Plant in Gyeongju, South Korea. Nuclear power and fossil fuels to account for nearly 90% of the country’s energy mix in 2022 © Gene Chung/Bloomberg
According to Taiwan’s Bureau of Energy, coal, oil and natural gas generation were to account for more than 80 percent of Taiwan’s energy needs in 2022, while renewables accounted for just over 8 percent. In addition, Taiwan is phasing out the use of nuclear power by 2025 – a low-emission energy source that last year made up a little over 8 percent of the total energy mix.
South Korea is also in a similar situation. Korea Electric Power data shows that renewable energy generation will account for less than 9 percent in 2022, while nuclear power and fossil fuels will account for nearly 90 percent.
According to the Energy Information Administration, the US will generate 22 percent of its electricity from renewable energy sources in 2022. Official figures show that renewable energy will account for 41 percent of the energy produced in the EU in 2021. But considering the block’s total energy mix including imports, renewables account for a little over 17 percent of the total.
TSMC has pledged to use 100% renewable energy for global operations by 2050, while some US and European rivals aim to achieve the target before 2030 © Lam Yik Fei/Bloomberg
The situation could affect investment and even jeopardize orders from Asian suppliers from global customers such as Apple, Google and Microsoft. All three have committed to using 100 percent renewable energy by 2025 and have geared their supply chains to facilitate such a move.
TH Tung, chief strategy officer at chip substrate maker Kinsus Interconnect Technology, said Taiwan’s target of 20 percent renewable energy by 2025 lags far behind the rest of the world and poses a risk to the island’s position in the global tech supply chain. Kinsus is a supplier to Intel, AMD and Nvidia, while Tung also serves as president of Kinsus’ parent company, major iPhone assembler Pegatron.
“(This) high-carbon-emitting power generation will cause Taiwan to be ‘disliked’ by international society,” said Tung, who also serves as deputy director at the Taiwan Climate Partnership, launched by Taiwanese tech major The proposed supply chain is a carbon-reduction initiative. Suppliers including TSMC, Pegatron and Apple-supplier Delta Electronics.
this is from the article Nikkei Asia, a global publication with a distinctive Asian perspective on politics, economy, business and international affairs. Our own correspondents and external commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of the 300 largest and fastest growing listed companies from 11 economies outside Japan.
Kyungrak Kwon, a renewables expert at Plan 1.5, a non-profit policy advocacy organization, said the South Korean government is not prioritizing the expansion of renewable energy, and in turn “Korean companies are not getting enough renewable energy supplies, which can undermine their potential. competitiveness”
Christophe Fouquet, executive vice president of European chip equipment maker ASML, told Nikkei Asia that energy sourcing will be an essential criterion for his company when it comes to choosing where to invest. “Over time, (green energy) becomes a condition for us to be able to run our business. So before selecting a site, we have to ensure that there will be access to green energy.”
Unlike the EU and the US, which are large economic blocs, the Asia-Pacific region is more fragmented, making it difficult to create a unified market for renewable energy certificates, said an executive at Infineon, Europe’s biggest chip maker. Infineon said it has already reached its goal of 100 percent green energy use, including purchasing renewable energy certificates, in its European and US operations, but has yet to reach that goal in its Asia-Pacific operations.
According to GlobalWafers’ HSU, meeting Infineon-like demands could be a matter of survival. “Taiwan needs not only enough electricity for future growth, but enough green energy to remain truly competitive.”
A version of this article was first published by Nikkei Asia on June 30. ©2023 Nikkei Inc. All rights reserved.
Related Stories
Inadequate access to renewable energy in its home markets has left Asia’s biggest chip makers behind their US and European rivals in the race to cut carbon emissions.
Making chips, especially cutting edge chips, is extremely energy intensive. But Taiwan Semiconductor Manufacturing, the world’s biggest contract chip maker, and Samsung Electronics, the world’s biggest memory-chip maker, are struggling to reduce their domestic carbon footprint.
TSMC President Mark Liu said at the company’s annual general meeting that Taiwan’s slowness in developing renewable energy is holding the company back from its environmental goals.
“Our overseas sites in the US and China have already completely switched to green energy,” Liu said. “However, we have not yet moved forward to use more green energy in Taiwan. The reality is that Taiwan doesn’t have enough green energy for us to use.”
Liu said industry-wide efforts to adopt renewable energy have accelerated recently, especially since the Russian invasion of Ukraine. “There is competition among all economies to develop green energy, from the US to Japan to Europe,” the president said. The war, which began in February last year, caused turmoil in energy markets, as Russia was a major exporter of oil and natural gas.
A Samsung Electronics chip plant in Pyeongtaek, South Korea. Manufacturers are under pressure to adopt greener manufacturing processes © Samsung Electronics/Reuters
Meanwhile, Samsung cited the consensus view of members of the RE100, a global renewable energy initiative for corporations, that South Korea is one of the most challenging countries in the world to source renewable energy because of limited purchase options for companies.
Samsung’s smaller rival SK Hynix said renewables would account for just 4 percent of total use in 2021, while Japan’s Kioxia’s figure for the 12 months to March 2022 was just 0.02 percent.
Chips manufactured in Asia will be less green than those produced in the US and Europe as a result of limited sources of renewable energy, which customers are concerned about.
Doris Su, president and chief executive of Global Wafers, the world’s third-largest wafer materials maker, said there is growing demand from customers, especially European chip makers, to buy wafers produced from green energy. GlobalWafers has manufacturing facilities in nine countries in Asia, the Americas and Europe.
“This will be a long-term trend and will affect the competitiveness of the company. Whether your energy is green enough may become the deciding factor on whether you can get orders in the future,” Hsu said. “Customers will compare price, quality and whether or not your energy source is green.”
But HSU said sourcing enough renewable energy was challenging in Taiwan, Japan and South Korea. “All these places are heavily populated and it is not easy to get enough land or roof space for renewable sources like solar farms,” he said.
“In most Asian countries, access to wind and solar power is limited,” said an executive of the South Korean chip industry. “Obtaining renewable energy from other countries is also not easy due to geographic and diplomatic boundaries.”
Samsung, TSMC and SK Hynix have pledged to use 100 percent renewable energy for global operations by 2050, while US chipmaker Intel and Europe’s Infineon and STMicroelectronics aim for 2030, according to a Nikkei Asia analysis of company disclosures. This is the goal to be reached before. Top Japanese chip makers Kioxia and Sony have both committed to using renewable energy entirely by 2040, later than their Western counterparts.
The lack of renewable energy could impact Asian chipmakers’ road map to reach net zero emissions. According to the company, electricity use accounts for 62 percent of TSMC’s carbon emissions. Liu said the company is evaluating ways to move the deadline forward and aim to achieve 100 percent green energy use between 2030 and 2050.
The race to go green begins as leading economies push to shore up critical semiconductor production in a strategy that includes persuading top Asian chip makers to expand chip plants beyond their home soil.
Chip makers and analysts said a low energy mix in renewables and the lack of mature, recognized renewable energy certifications in the region are two factors holding back Asia’s chip industry from green operations.
A beach near the Volseong Nuclear Power Plant in Gyeongju, South Korea. Nuclear power and fossil fuels to account for nearly 90% of the country’s energy mix in 2022 © Gene Chung/Bloomberg
According to Taiwan’s Bureau of Energy, coal, oil and natural gas generation were to account for more than 80 percent of Taiwan’s energy needs in 2022, while renewables accounted for just over 8 percent. In addition, Taiwan is phasing out the use of nuclear power by 2025 – a low-emission energy source that last year made up a little over 8 percent of the total energy mix.
South Korea is also in a similar situation. Korea Electric Power data shows that renewable energy generation will account for less than 9 percent in 2022, while nuclear power and fossil fuels will account for nearly 90 percent.
According to the Energy Information Administration, the US will generate 22 percent of its electricity from renewable energy sources in 2022. Official figures show that renewable energy will account for 41 percent of the energy produced in the EU in 2021. But considering the block’s total energy mix including imports, renewables account for a little over 17 percent of the total.
TSMC has pledged to use 100% renewable energy for global operations by 2050, while some US and European rivals aim to achieve the target before 2030 © Lam Yik Fei/Bloomberg
The situation could affect investment and even jeopardize orders from Asian suppliers from global customers such as Apple, Google and Microsoft. All three have committed to using 100 percent renewable energy by 2025 and have geared their supply chains to facilitate such a move.
TH Tung, chief strategy officer at chip substrate maker Kinsus Interconnect Technology, said Taiwan’s target of 20 percent renewable energy by 2025 lags far behind the rest of the world and poses a risk to the island’s position in the global tech supply chain. Kinsus is a supplier to Intel, AMD and Nvidia, while Tung also serves as president of Kinsus’ parent company, major iPhone assembler Pegatron.
“(This) high-carbon-emitting power generation will cause Taiwan to be ‘disliked’ by international society,” said Tung, who also serves as deputy director at the Taiwan Climate Partnership, launched by Taiwanese tech major The proposed supply chain is a carbon-reduction initiative. Suppliers including TSMC, Pegatron and Apple-supplier Delta Electronics.
this is from the article Nikkei Asia, a global publication with a distinctive Asian perspective on politics, economy, business and international affairs. Our own correspondents and external commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of the 300 largest and fastest growing listed companies from 11 economies outside Japan.
Kyungrak Kwon, a renewables expert at Plan 1.5, a non-profit policy advocacy organization, said the South Korean government is not prioritizing the expansion of renewable energy, and in turn “Korean companies are not getting enough renewable energy supplies, which can undermine their potential. competitiveness”
Christophe Fouquet, executive vice president of European chip equipment maker ASML, told Nikkei Asia that energy sourcing will be an essential criterion for his company when it comes to choosing where to invest. “Over time, (green energy) becomes a condition for us to be able to run our business. So before selecting a site, we have to ensure that there will be access to green energy.”
Unlike the EU and the US, which are large economic blocs, the Asia-Pacific region is more fragmented, making it difficult to create a unified market for renewable energy certificates, said an executive at Infineon, Europe’s biggest chip maker. Infineon said it has already reached its goal of 100 percent green energy use, including purchasing renewable energy certificates, in its European and US operations, but has yet to reach that goal in its Asia-Pacific operations.
According to GlobalWafers’ HSU, meeting Infineon-like demands could be a matter of survival. “Taiwan needs not only enough electricity for future growth, but enough green energy to remain truly competitive.”
A version of this article was first published by Nikkei Asia on June 30. ©2023 Nikkei Inc. All rights reserved.
