{"id":7980,"date":"2016-11-01T19:50:28","date_gmt":"2016-11-01T23:50:28","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/tsmc-moving-towards-sustainable-semiconductor-manufacturing\/"},"modified":"2016-11-01T19:52:50","modified_gmt":"2016-11-01T23:52:50","slug":"tsmc-moving-towards-sustainable-semiconductor-manufacturing","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/tsmc-moving-towards-sustainable-semiconductor-manufacturing\/","title":{"rendered":"TSMC: Moving towards sustainable semiconductor manufacturing"},"content":{"rendered":"

As the world’s largest pure-play semiconductor foundry, Taiwan Semiconductor Manufacturing Company (“TSMC”) manufactures and sells millions of semiconductor wafers each year. The semiconductor manufacturing production process generates large amounts of gaseous and chemical wastes, wastewater and other industrial wastes, and as such TSMC is affected by climate change in a number of different ways, facing a combination of (1) regulatory, (2) physical and (3) reputational challenges.<\/p>\n

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(1) Regulatory Challenges<\/strong><\/p>\n

TSMC operates foundries in Taiwan, Mainland China as well as the United States, and is hence regulated by the R.O.C. Environmental Protection Administration, the U.S. Environmental Protection Agency and the State Environmental Protection Administration of Mainland China. To comply with increasing regulatory scrutiny of these various agencies, TSMC has established an environmental, safety and health (\u201cESH\u201d) team at its corporate level that exclusively deals with regulations and structures relevant solutions as needed.<\/p>\n

 <\/p>\n

One of the main regulatory requirements concerns the reduction of carbon footprint. The semiconductor manufacturing process generates a number of major greenhouse gases such as CF4, C2F6, CHF3 etc. Over the past decade, TSMC has invested heavily in environmentally friendly equipment and production processes, reducing emissions to 10% below average emission levels in 1997. Furthermore, management is capping emission targets at this level despite continued growth of the company’s production capacity.<\/p>\n

 <\/p>\n

Another major aspect of increasingly tightening regulations concerns fuel and energy taxes that push industry players for more efficient energy consumption. TSMC’s primary source of energy is electricity, followed by water. On the electricity front, TSMC has not only continually optimized consumption in its manufacturing process, but has also begun to invest in renewable energy. in 2015, the company purchased 100 million kWh of green power, making up 64.1% of all green energy purchased in Taiwan that year. TSMC foundries have also installed solar panels to generate additional electricity. As of the end of 2015, TSMC’s total solar panel capacity was around 1,300 kWh. The combined effect of these measures has resulted in a reduction of around 50,000 tons of CO2 emissions.<\/p>\n

 <\/p>\n

With regards to water consumption, TSMC collects water discharges through independent drainages, and then reuses that water for the manufacturing process or other secondary uses such as cooling towers or toilet water. In fact, TSMC separates drain pipes into 20 different categories based on their characteristics and employs more than 15 categories of treatment systems. Overall, TSMC has achieved a water recycling rate of 85%, and continues to invest in additional water conservation strategies.<\/p>\n

 <\/p>\n

(2) Physical Challenges:<\/strong><\/p>\n

As climate change leads to an\u00a0increased likelihood of events such as extreme precipitation and typhoons, TSMC has begun to collaborate with governments and science park administration teams to assess risks of extreme climate events, and developed relevant risk mitigation plans. For example, newly constructed foundries now have significantly higher foundations and foundries in low-altitude regions have installed floodgates given the concern around rising sea levels in a global environment of rising average temperature.<\/p>\n

 <\/p>\n

(3) Reputational Challenges<\/strong><\/p>\n

At a market capitalization of around $150 billion, TSMC is one of the largest companies in Taiwan and the world. As such, the company faces particular scrutiny regarding its manufacturing practices not only from regulatory bodies, but also from other industry peers and wider society. Recognizing the weight of reputational burden, TSMC has aimed to continuously outperform minimum regulatory requirements, and then in turn actively share its experience and practices with the broader industry, sponsoring a number relevant industry events and conferences to establish its own reputation as a leader in environmentally responsible practices.<\/p>\n

 <\/p>\n

Further Thoughts<\/strong><\/p>\n

As TSMC moves forward on the path of environment sustainability, I personally see most promise in an expanded investment program in renewable energy such as solar power. Such a move is particularly attractive not only from a sustainability perspective but also from a business perspective. Expanding into green energy projects allows TSMC to (1) further reduce its carbon footprint by generating additional carbon credits, (2) lower electricity costs in an industry where revenues are notoriously cyclical and volatile, and (3) potentially develop a presence in an industry poised for faster growth than pure-play wafer manufacturing.<\/p>\n

 <\/p>\n

Sources:<\/em><\/p>\n

    \n
  1. http:\/\/www.tsmc.com\/download\/ir\/secFillings\/20F-2015.pdf<\/li>\n
  2. http:\/\/www.tsmc.com\/english\/csr\/climate_change.htm<\/li>\n
  3. http:\/\/www.tsmc.com\/download\/csr\/TSMC_Environmental%20Policy_En.pdf<\/li>\n<\/ol>\n

     <\/p>\n

    Word Count: 680<\/p>\n

     <\/p>\n","protected":false},"excerpt":{"rendered":"

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