The semiconductor market refers to the global industry that produces and sells semiconductor devices, such as computer chips, memory chips, and other electronic components. These devices are used in a wide range of products and industries, including computers, smartphones, automobiles, healthcare devices, industrial automation, and many more.
The semiconductor market has been in rapid growth for many years now, with revenues in the hundreds of billions of dollars. According to the Semiconductor Industry Association, global semiconductor revenues reached $400 billion in 2019. The industry is driven by the continued growth in demand for electronic devices and the increasing complexity of these devices, which require more and more advanced components.
(Precedence Research, 2022).
Due to the size of the industry, it comes as no surprise that several other industries have built dependencies on its predictable growth. For example, the materials needed for computer chip production. One of the most important materials used is pure silicon. Nearly all chips are made from silicon because it is relatively cheap and abundant, and it has the necessary electrical properties for making transistors, which are the basic building blocks of a computer chip.
Other materials that are used in production include various metals and insulators. These are used to create the electrical connections and pathways that allow the transistors and other components on a chip to communicate with one another. Metals that are used for conductivity include aluminum, copper, gold, platinum, and tungsten. Insulators on the other hand block electrical conductivity. These include silicon dioxide and silicon nitride, which separate the different layers of a chip and protect the transistors from erosion. These parallel industries are also valued at several $100’s billion (USD).
The manufacturing of a computer chip is a multi-step process that involves several different techniques. The process can be broken down into several main phases. Wafer fabrication, Assembly, prototyping, and testing. While procuring the materials needed for production can result in questionable practices, there is an even larger problem that will inevitably affect manufacturers’ ability to continue the industry’s assumed growth rate.
A looming crisis
There is one material that was omitted in the preceding list as an essential material for chip production, and that material is Water. Specifically Ultra Pure Water (UPW). This may come as a surprise given that water is something to be avoided at all costs once a chip has been created. This is because water naturally erodes metals and causes shortages within a chip’s conductive channels. Nonetheless, UPW is absolutely fundamental in the process of manufacturing. A typical manufacturing facility will use roughly 1,600 gallons of regular freshwater water to make one thousand gallons of UPW. This means that a large operation will use up to 5 million gallons a day or as much as 270 billion gallons a year for the whole industry. All of that water is used during the process in several ways.
- Cooling: The equipment used in the fabrication process generates a lot of heat. Water is used to cool down the equipment, which keeps them operating at the correct temperatures.
- Cleaning: Water is used to clean the wafers and equipment in order to remove any impurities or contaminants that may affect the integrity of the chip.
- Chemical reactions: Many of the chemical reactions that occur during the fabrication process require water as a solvent. For example, etching uses a chemical solution that contains water, and this process is important for defining the shape of the transistors on the wafer.
- Waste: The water used in the process needs to be clean and pure, thus, wastewater generated during the process is properly treated before being released to the environment.
An example of a semiconductor water usage trend can be observed by looking at the industry’s leader, Taiwan Semiconductor Manufacturing Company (TSMC).
If we expand water usage to consist of national usage amounts, we can really begin to see how important access to UPW is to the industry and their respective nations.
This wouldn’t be a big deal if fresh water was limitless, but as it becomes more evident every year, it is in fact a diminishing resource. Climate change is causing a variety of issues surrounding water supply. One of which is an increase in the frequency and severity of droughts. Droughts occur when there is a prolonged period of time with below-average precipitation, which can lead to a lack of water for crops, livestock, human consumption, and of course manufacturing. As the Earth’s temperature increases, the atmosphere can hold more water vapor, which can lead to more evaporation and transpiration (the process by which plants release water vapor into the atmosphere). This can lead to drier conditions and an increased risk of droughts in some regions. We must also consider how climate change is causing droughts via changes in precipitation patterns. Some regions may experience more intense storms and flooding, while others may experience less rainfall overall. This creates regions that are overly saturated while other areas become arid. Climatologists are concerned about the potential for freshwater shortages. As droughts become more frequent and severe, there may be less water available for human consumption, irrigation, and industrial uses. We can safely predict a wide range of negative impacts.
It is important to note that not all regions will be equally affected by water shortages, and some regions may actually see an increase in water availability. However, it is likely that the overall trend will be toward more water scarcity in most regions.
“Annotated map of TWS trends Trends in TWS (in centimeters per year) obtained on the basis of GRACE observations from April 2002 to March 2016. The cause of the trend in each outlined study region is briefly explained and color-coded by category. The trend map was smoothed with a 150-km-radius Gaussian filter for the purpose of visualization; however, all calculations were performed at the native 3° resolution of the data product.”
Semiconductors have a wide range of applications and usage in many different industries, making them a key component in personal computing technologies, consumer electronics, automotive parts, industrial equipment, and Medical devices. Any disruption to this foundational industry could be dire for the global economy.
In this brief, we have discussed an apparent problem with the predictive models that describe the rate of growth for the semiconductor industry. It is evident that, if left uninterrupted, the industry would rise based on historical data. In fact, nearly a trillion USD, are invested in this belief. However, as it has been shown, there are important considerations that have been unwisely ignored.
If we take the increase in demand for semiconductors over time, consider water requirements, and then overlay this data with the decrease in available freshwater over time, we immediately observe a startling reality.
This insight clearly depicts a not-too-distant cliff for the industry’s growth. One that can be avoided is manufacturing companies can devise new methods of production that require less UPW and/or begin to strategically pick locations that will avoid long-term droughts brought on by climate change.
Govindan, Prakash. January 18, 2022. Water’s Critical Role in Semiconductor Manufacturing. Industry Today. Website: https://industrytoday.com/waters-critical-role-in-semiconductor-manufacturing/
Jones, Chris & Vacuum, Edwards. October 24, 2022. Water Supply Challenges for the Semiconductor Industry. Semiconductor Digest. Website: https://www.semiconductor-digest.com/water-supply-challenges-for-the-semiconductor-industry/
Statista. September 2021. Annual water consumption of Taiwan Semiconductor Manufacturing Company (TSMC) from 2016 to 2020. Website: https://www.statista.com/statistics/1313040/tsmc-water-consumption-by-user/
Global Industry Analysis, Size, Share, Growth, Trends, Regional Outlook, and Forecast 2022 – 2030. September 2022. Precedence Research. Website: https://www.precedenceresearch.com/semiconductor-market
Pokhrel, Yadu. January 11, 2021. Two-thirds of Earth’s land is on pace to lose water as the climate warms – that’s a problem for people, crops and forests. Yahoo News. Website: https://news.yahoo.com/two-thirds-earths-land-pace-161152676.html?.tsrc=daily_mail&uh_test=2_15
Emerging trends in global freshwater availability – Scientific Figure on ResearchGate. Available from: https://www.researchgate.net/figure/Annotated-map-of-TWS-trends-Trends-in-TWS-in-centimetres-per-year-obtained-on-the-basis_fig11_325179380
United Nations. September, 21 2016. World Could Face Water Availability Shortfall by 2030 if Current Trends Continue, Secretary-General Warns at Meeting of High-Level Panel. SG/SM/18114-ENV/DEV/1717. Website: https://press.un.org/en/2016/sgsm18114.doc.htm#:~:text=Action%20on%20water%2Drelated%20issues,in%20water%20availability%20by%202030