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Semiconductors firms - big power users

Colley Hwang, DIGITIMES, Taipei 0

Credit: DIGITIMES

As global warming receives global attention, curbing greenhouse gas is both a responsibility and pressue for companies. This pressure, which promises to gradually become cost and risk in the future, is now an important part of a company's business strategy. TSMC's senior vice president for Europe and Asia, Lora Ho, is the chair of the company's ESG committee. Ho is a former chief financial officer and is very familiar with cost structures and business conditions, which I think is why she was appointed to this important position.

According to Korean media, among the world's major semiconductor companies, TSMC's total carbon emissions are 15.5 million metric tons, higher than Samsung Electronics' 12.5 million metric tons and Intel's 8.3 million metric tons. Since Samsung's financial report did not isolate the carbon emissions from its semiconductor division, we can only compare the carbon emissions of TSMC and Intel, two pure semiconductor manufacturers.

Intel's 2021 annual revenue is US$79 billion, 1.39 times that of TSMC's US$56.8 billion, but Intel's carbon emissions are only 53.5% of TSMC's. Why is there such a significant difference between the two?

From the chart below, we can see that in Scope 1 and 3, the difference between the two companies is limited, but only Scope 2 has a very big difference. Scope 1 refers to the greenhouse gas produced by the company's direct use of fossil fuels; Scope 2 refers to the greenhouse effect generated by the indirect use of fossil fuels, mainly greenhouse effect generated by electricity consumption; and Scope 3 is the greenhouse effect generated by other factors.

Basically, in Scope 1 and 3, the difference between TSMC and Intel is not much, but in Scope 2, TSMC's carbon emission is 7.5 million metric tons, while Intel's is only 0.9 million metric tons. This difference is mainly due to the lower percentage of green power in Taiwan's electricity mix and TSMC's use of higher power-consuming processes.

It is reported that Taiwan's carbon emission per kWh is 583 grams, while the US is 380 grams. Intel's green power ratio is much higher than TSMC's, and the crucial factor may be TSMC's extensive use of high power consumption EUV equipment.

As of 2021, TSMC accunted for more than 90% of the world's 7nm and 5nm advanced process output, and without the EUV equipment, such advanced node manufacturing would not be possible. In TSMC's winning formula, EUV equipment is indispensable, but also causes TSMC to emit much more greenhouse gases in Scope 2 than Intel.

As Intel will not introduce Intel 7 process until after 2022, it is estimated that its structure in 2021 will not see much change. But TSMC's advancements in manufacturing processes will put the company under more pressure in terms of curbing greenhouse gases.

This problem will not be unique to TSMC. Taiwan is known for its mass production capability, and the production process creates enormous amounts of carbon emissions. The returning of more Taiwanese manufacturers from China is expected to exacerbate the problem. Once curbing greenhouse gases becomes the key to market competition, Taiwan, which relies heavily on imports of energy products, will face serius challenges.

TSMC and Intel: Carbon emissions (million metric tons)

Source: Companies, compiled by DIGITIMES

Colley Hwang, president of DIGITIMES Asia, is a tech industry analyst with more than three decades of experience under his belt. He has written several books about the trends and developments of the tech industry, including Asian Edge: On the Frontline of the ICT World published in 2019, and Disconnected ICT Supply Chain: New Power Plays Unfolding published in 2020.
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