tsmc faces sustainability hurdles amid chip demand boom
Taipei, Wednesday, 25 December 2024.
Taiwan’s TSMC is navigating a complex landscape as it attempts to balance its ambitious climate goals with the soaring demand for semiconductors. As one of the island’s largest electricity consumers, TSMC’s operations significantly impact Taiwan’s carbon emissions. The semiconductor industry, which constitutes a quarter of Taiwan’s GDP, is under scrutiny for its environmental footprint. With TSMC holding a commanding 64% share of the global semiconductor market, the pressure mounts to align production with sustainable practices. This challenge is further compounded by the Taiwanese government’s past decisions, such as prioritizing chip production over agriculture during droughts. The firm faces demands from major clients like Apple to transition to 100% renewable energy by 2030, a target that seems daunting given the current reliance on non-renewable sources. As Taiwan grapples with these issues, the tension between technological advancement and environmental responsibility becomes increasingly pronounced.
Market dominance and energy consumption
TSMC’s commanding position in the semiconductor industry comes with significant environmental responsibilities. The company holds 64% of the global semiconductor market as of Q3 2024 [1], while consuming approximately 8% of Taiwan’s total electricity [1]. This substantial energy footprint has become a critical concern as the company faces mounting pressure to reduce its environmental impact. The semiconductor industry’s contribution of 25% to Taiwan’s GDP [1] underscores the delicate balance between economic importance and environmental sustainability.
Renewable energy challenges
The path to sustainability faces significant hurdles in Taiwan’s energy landscape. Only 11% of Taiwan’s energy supply came from renewable sources between September 2023 and August 2024 [1]. The government’s target of 20% renewables by 2025 appears increasingly unattainable [1]. This shortfall poses a particular challenge for TSMC, as major clients like Apple demand a transition to 100% renewable energy by 2030 [1]. The situation is further complicated by downgraded plans for offshore wind capacity, now projected between 2.56 GW and 3.04 GW for 2024 [1].
Global expansion and environmental impact
TSMC is actively expanding its global footprint while managing environmental concerns. The company is investing heavily in new facilities, including a 40 billion dollar project in Arizona [3] and a plant in Dresden, Germany, with an investment exceeding 10 billion euros [3]. These international expansions represent TSMC’s strategy to diversify production bases while potentially addressing environmental concerns through access to different energy markets. The company’s CEO, C.C. Wei, has highlighted Europe’s promise due to its automotive and industrial sectors [3].
AI boom intensifies sustainability challenges
The rapid growth in artificial intelligence applications is adding pressure to TSMC’s sustainability goals. As noted by Lena Chang from Greenpeace, ‘The AI market is becoming more crazy than ever,’ [1] highlighting increased energy demands from semiconductor manufacturing for AI applications. TSMC’s position as a leading beneficiary of the AI boom in 2024 [4], particularly through its dominance in advanced nodes below 7 nanometers [4], creates additional challenges in balancing growth with environmental responsibility.