A recent unexpected large-scale power outage in Taiwan has rekindled worries among foundries that they could suffer not only insufficient power supply during the peak power-consumption season in summer but also more blackouts without warning, according to industry sources.
The March 3 massive blackouts, which disrupted power supplies to around 5.5 million households and businesses around Taiwan, had little impact on semiconductor makers, including TSMC, operating in Hsinchu Science Park (HSP), northern Taiwan and Southern Taiwan Science Park (STSP), but they were almost scared into a cold sweat, the sources said.
At foundry fabs, a very short power disruption to the automated material conveying operations could result in huge losses of wafer scraps. As renewable energy is just at an initial development stage and no other solutions are available in the foreseeable future, power shortages and outages may become a new norm in Taiwan. This, coupled with force majeure such as earthquakes or drought-induced water crunch will pose huge challenges to manufacturing operations at foundry houses TSMC, UMC, PSMC and VIS, and other semiconductor supply chain players in the country, the sources continued.
The pandemic-induced semiconductor boom has not yet cooled down after having lasted for more than two years, with the foundry sector still at its peak of operation. TSMC and domestic peer foundries together dominate nearly 70% of the global foundry market, but they also face growing geopolitical risks, adding pressure to their operations, the sources indicated.
The sources also noted Taiwan semiconductor supply chain has taken precautions against power restrictions and outages. Besides striving hard to expand backup power generation capacity, makers have also been keen to increase purchases of renewable energy and improve energy-use efficiency.
TSMC, for instance, has signed a 20-year corporate green power purchase agreement (CPPA) with Orsted, the largest-ever of its kind in renewable energy deal that allows the former to obtain full output from the latter's 920MW Greater Changhua 2b&4 offshore wind farms in central Taiwan.
TSMC has set an initial adoption ratio for renewable energy to 20% at its new 3nm fabs, and will gradually boost the ratio to 25% at all its manufacturing plants and 100% at all its non-production facilities, aiming to fulfill its ESG (environment, social, governance) goals.
Nevertheless, the adoption ratio for renewable energy is still relatively low at TSMC fabs for the moment, and variables such as power outages and shortages will haunt the foundry giant and other semiconductor and electronics manufacturers, the sources said.
TSMC is now the largest power consumer in Taiwan
TSMC is now the largest power consumer in Taiwan. Statistics show that the company consumed 16 billion kwh in 2020, accounting for 5.9% of the country's total power consumption of 271.1 billion kwh for the year.
Because the power consumption of EUV lithography machines is more than 10 times that of traditional deep ultraviolet (DUV) models, TSMC has been actively looking for energy-saving solutions for EUV machines through big data analysis, but has been only able to improve energy use efficiency by 5%, the sources said.
With its capacity expansions already in high gear at major science parks around Taiwan, TSMC will soon install 3nm/2nm EUV machines that consume much more power, with insufficient or unstable power supply to generate the largest production risk for the company, the sources stressed.
On another front, tight water supply has also become a pressing issue for Taiwan's semiconductor supply chain. Though TSMC and other major makers continue to book regular water trucking support, implement water conservation and develop new water resources, and current reservoirs are now still at full water levels, the sources continued, it is hard to ensure that water shortages resulting from months of rainless weather in 2021 will not occur again in 2022.
Taiwan has the advantages of complete industrial clusters, quality manpower and cost-effective production, but the semiconductor industry chain can hardly address potential crises of water crunch, electricity shortage and earthquakes. As significant power supply improvements are still not in sight and construction of new power plants will take time, the sources lamented, TSMC and other major power users in the semiconductor industry can hardly be assured of adequate power supply. From this perspective, TSMC, though under pressure from all sides to enforce overseas expansion plans, can at least diversify production risks through such plans, the sources added.
Article translated by Willis Ke
