Sustainability in the Semiconductor industry
Reducing emissions and optimizing resources in semiconductor manufacturing is a massively complex task with many moving parts and multiple cascading effects. While semiconductors are critical to enabling a sustainable future, the manufacturing of those chips is notoriously resource-intensive. Consider this: a single fabrication plant can consume up to 10 million gallons of water per day, as much electricity as is required to power 50,000 homes per day, and generate 60,000 tons of waste over the course of a year.
An industry-wide consensus has emerged regarding the importance of incorporating sustainable practices into semiconductor production, especially given the industry's projected growth in the coming years. Furthermore, individual businesses are stepping up to do their part. Applied Materials has made significant progress in reducing our carbon footprint and increasingly powering our operations with renewable energy, as detailed in our most recent Sustainability Report. Other industry participants are taking similar steps to reduce Scope 1 and Scope 2 emissions (those produced by a company and the energy it consumes).
However, as an industry, we need to step up our efforts. Decarbonization necessitates a concerted and collaborative effort to reduce Scope 3 emissions, which are those produced throughout a company's entire value chain. And this is where things get complicated because it entails collaborating with industry partners, suppliers, and customers to define the levels and sources of emissions that are generated outside of any individual entity's control. The problem then becomes determining which actions are most likely to have a meaningful and measurable impact.
High Value Problem
The stakes couldn't be any higher. Advancing decarbonization is critical for the semiconductor industry's future and, ultimately, for the planet's future. Indeed, in terms of systems engineering, it is possibly the most significant high-value problem you can imagine.
The good news is that we work as systems engineers. We use our skills, talents, and methodologies in our industry to fuel unprecedented advances and innovation in semiconductor capabilities. These same characteristics are required to untangle the multi-layered complexities of creating a more sustainable industry. A systems engineering mindset, in particular, can define the cause-and-effect linkages that connect short-term actions to long-term collective goals. These connections lay the groundwork for the critical task of tracking progress over time and holding individual stakeholders accountable along the way.
Here are three priority areas where systems engineering practices, both individually and collectively as an industry, can move the decarbonization needle in the right direction.
1. Product and manufacturing processes that are more efficient
Decarbonization begins with each company reducing its environmental impact through more efficient processes and increased reliance on renewable energy sources. This, however, goes beyond each company simply accepting responsibility for its own footprint. The effects of production practises must be considered both upstream and downstream.
The Greenhouse Gas (GHG) Protocol includes the lifetime emissions generated by the use of products by end users when calculating a company's Scope 3 emissions. In the case of Applied, these are the emissions caused by the energy and chemicals used to power our equipment at our customers' fabs over the course of the product's lifespan.
The impact of product usage - and the extent to which we are all in this together - is illustrated by Applied's analysis of Scope 3 emissions. Based on our 2019 baseline, we estimate that Applied's total Scope 3 impact for our semiconductor products is accounted for by Use of Sold Products (Category 11 in the GHG Protocol) (see chart below). As a result, we have a strong mutual interest in improving our own practises while also assisting our customers in improving theirs. Simply put, "not my problem" isn't an option.
Meanwhile, a collaborative approach, particularly one involving systems engineers, can have a significant impact. Applied's iSystemTM platform uses intelligent Internet of Things (IoT) capabilities to improve energy efficiency without affecting production output, and has helped chipmakers such as TSMC improve efficiencies, reduce emissions, and lower energy consumption. The platform's "energy-saving mode" enables demand-based electricity consumption by synchronizing energy requirements to operation.
2. Decarbonization of the power grid
The demand side of the equation at the fab is addressed by innovative technology solutions that enable more efficient production processes and practices that reduce energy consumption. Even the most energy-efficient fabs, however, will require massive amounts of electricity. As a result, grid decarbonization is critical to achieving significant and long-term emissions reductions.
As an industry, we must invest in scaling renewable energy sources like wind and solar, as well as evaluating other carbon-free energy sources and storage methods. Meanwhile, advocacy must focus on smarter practices, such as ensuring that new fabrication facilities are located in areas with higher amounts of renewable energy and that can accommodate massive amounts of water demand. A systems engineering perspective must be included in decisions traditionally made by economic development authorities and politicians when determining the location of new fabs.
3. Improve Supplier Practices
Expertise in systems engineering can also be used to improve supplier practices. Purchased Goods and Services (Category 1) account for approximately 15% of Applied's estimated Scope 3 emissions and are the second largest contributor to our footprint.
Engineers can assist procurement teams in defining emissions-focused metrics and criteria for selecting and evaluating suppliers. Contractual clauses that offer financial incentives to suppliers to invest in new technologies or develop new processes that reduce emissions can be an effective tool for prioritizing sustainable practices. Engineers have the knowledge required to identify the areas that are most appealing from a business standpoint for suppliers while also having the greatest environmental impact.
IoT initiatives that use smart sensors and networks of connected devices, for example, can monitor energy requirements, optimize consumption, and document savings. Furthermore, such solutions continuously collect and analyze data in order to generate new insights that can inform ongoing improvements. Again, an engineering perspective can help initiatives find the sweet spot that improves business results while also achieving sustainability goals.
Systems engineering thinking can lay the groundwork for defining priorities, developing innovative solutions that result in measurable gains, and creating momentum for continued progress. Cooperation is critical because our company is only one component of a complex ecosystem with inherently limited independent actions. Meanwhile, the prospects for collaboration are promising. The SEMI Climate Consortium, or SCC, is a group of semiconductor equipment manufacturers and chip makers dedicated to decarbonizing our industry. Applied is a founding member of the SCC.
The prospect of the semiconductor industry working together to accelerate its transition to a lower-carbon future is very appealing. It will undoubtedly put our systems engineering skills to the test, but the societal benefits will be well worth the effort.
An industry-wide consensus has emerged regarding the importance of incorporating sustainable practices into semiconductor production, especially given the industry's projected growth in the coming years. Furthermore, individual businesses are stepping up to do their part. Applied Materials has made significant progress in reducing our carbon footprint and increasingly powering our operations with renewable energy, as detailed in our most recent Sustainability Report. Other industry participants are taking similar steps to reduce Scope 1 and Scope 2 emissions (those produced by a company and the energy it consumes).
However, as an industry, we need to step up our efforts. Decarbonization necessitates a concerted and collaborative effort to reduce Scope 3 emissions, which are those produced throughout a company's entire value chain. And this is where things get complicated because it entails collaborating with industry partners, suppliers, and customers to define the levels and sources of emissions that are generated outside of any individual entity's control. The problem then becomes determining which actions are most likely to have a meaningful and measurable impact.
High Value Problem
The stakes couldn't be any higher. Advancing decarbonization is critical for the semiconductor industry's future and, ultimately, for the planet's future. Indeed, in terms of systems engineering, it is possibly the most significant high-value problem you can imagine.
The good news is that we work as systems engineers. We use our skills, talents, and methodologies in our industry to fuel unprecedented advances and innovation in semiconductor capabilities. These same characteristics are required to untangle the multi-layered complexities of creating a more sustainable industry. A systems engineering mindset, in particular, can define the cause-and-effect linkages that connect short-term actions to long-term collective goals. These connections lay the groundwork for the critical task of tracking progress over time and holding individual stakeholders accountable along the way.
Here are three priority areas where systems engineering practices, both individually and collectively as an industry, can move the decarbonization needle in the right direction.
1. Product and manufacturing processes that are more efficient
Decarbonization begins with each company reducing its environmental impact through more efficient processes and increased reliance on renewable energy sources. This, however, goes beyond each company simply accepting responsibility for its own footprint. The effects of production practises must be considered both upstream and downstream.
The Greenhouse Gas (GHG) Protocol includes the lifetime emissions generated by the use of products by end users when calculating a company's Scope 3 emissions. In the case of Applied, these are the emissions caused by the energy and chemicals used to power our equipment at our customers' fabs over the course of the product's lifespan.
The impact of product usage - and the extent to which we are all in this together - is illustrated by Applied's analysis of Scope 3 emissions. Based on our 2019 baseline, we estimate that Applied's total Scope 3 impact for our semiconductor products is accounted for by Use of Sold Products (Category 11 in the GHG Protocol) (see chart below). As a result, we have a strong mutual interest in improving our own practises while also assisting our customers in improving theirs. Simply put, "not my problem" isn't an option.
Meanwhile, a collaborative approach, particularly one involving systems engineers, can have a significant impact. Applied's iSystemTM platform uses intelligent Internet of Things (IoT) capabilities to improve energy efficiency without affecting production output, and has helped chipmakers such as TSMC improve efficiencies, reduce emissions, and lower energy consumption. The platform's "energy-saving mode" enables demand-based electricity consumption by synchronizing energy requirements to operation.
2. Decarbonization of the power grid
The demand side of the equation at the fab is addressed by innovative technology solutions that enable more efficient production processes and practices that reduce energy consumption. Even the most energy-efficient fabs, however, will require massive amounts of electricity. As a result, grid decarbonization is critical to achieving significant and long-term emissions reductions.
As an industry, we must invest in scaling renewable energy sources like wind and solar, as well as evaluating other carbon-free energy sources and storage methods. Meanwhile, advocacy must focus on smarter practices, such as ensuring that new fabrication facilities are located in areas with higher amounts of renewable energy and that can accommodate massive amounts of water demand. A systems engineering perspective must be included in decisions traditionally made by economic development authorities and politicians when determining the location of new fabs.
3. Improve Supplier Practices
Expertise in systems engineering can also be used to improve supplier practices. Purchased Goods and Services (Category 1) account for approximately 15% of Applied's estimated Scope 3 emissions and are the second largest contributor to our footprint.
Engineers can assist procurement teams in defining emissions-focused metrics and criteria for selecting and evaluating suppliers. Contractual clauses that offer financial incentives to suppliers to invest in new technologies or develop new processes that reduce emissions can be an effective tool for prioritizing sustainable practices. Engineers have the knowledge required to identify the areas that are most appealing from a business standpoint for suppliers while also having the greatest environmental impact.
IoT initiatives that use smart sensors and networks of connected devices, for example, can monitor energy requirements, optimize consumption, and document savings. Furthermore, such solutions continuously collect and analyze data in order to generate new insights that can inform ongoing improvements. Again, an engineering perspective can help initiatives find the sweet spot that improves business results while also achieving sustainability goals.
Systems engineering thinking can lay the groundwork for defining priorities, developing innovative solutions that result in measurable gains, and creating momentum for continued progress. Cooperation is critical because our company is only one component of a complex ecosystem with inherently limited independent actions. Meanwhile, the prospects for collaboration are promising. The SEMI Climate Consortium, or SCC, is a group of semiconductor equipment manufacturers and chip makers dedicated to decarbonizing our industry. Applied is a founding member of the SCC.
The prospect of the semiconductor industry working together to accelerate its transition to a lower-carbon future is very appealing. It will undoubtedly put our systems engineering skills to the test, but the societal benefits will be well worth the effort.
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