Europe should prioritize sustainable chip production as industry emissions increase

[EUROPE] As the global demand for semiconductors continues to rise, particularly with the growth of artificial intelligence (AI) and other advanced technologies, the environmental impact of semiconductor production has become an increasingly important issue. A recent study highlights the need for Europe to focus on sustainable chip production, as emissions linked to the sector have surged. The report, published by the think tank Interface, raises concerns about the environmental cost of producing cutting-edge chips and suggests that Europe could enhance its competitiveness by focusing on greener manufacturing processes.

The Environmental Challenges of Semiconductor Production

Semiconductor manufacturing is an energy-intensive process that involves high levels of chemical use. Over the past eight years, global energy consumption in the sector has increased by 125%, driven by the growing demand for increasingly complex and powerful chips. These advancements, while enabling the development of technologies such as AI and electric vehicles, come at a significant environmental cost. The production of cutting-edge chips—those required for AI, data centers, and other high-tech applications—requires substantial energy and generates more emissions per unit of production.

Julia Hess, the lead researcher behind the study, explained that "mature" chips, such as those used in automotive systems, electric grids, and industrial machinery, are generally less polluting than their cutting-edge counterparts. These "legacy" chips typically have lower energy consumption and fewer emissions associated with their production. The increasing demand for advanced chips, however, has meant that the semiconductor sector is increasingly relying on more polluting and energy-hungry production methods.

The European Opportunity for Sustainable Chip Production

One of the key takeaways from the study is that Europe has a unique opportunity to prioritize sustainable chip production by focusing on its strengths in manufacturing chips for the green transition. Companies such as STMicroelectronics, Infineon, and NXP are already leading the way in producing semiconductors for renewable energy, electric vehicles, and other green technologies. By investing in these companies and promoting greener production methods, the EU could enhance its position in the global market, both in terms of sustainability and competitiveness.

"If the EU wants to double down on cutting-edge chip production, this will significantly affect the climate and environment (given these chips have much higher emissions and energy consumption) per wafer," Hess noted. This statement highlights the challenge Europe faces in deciding whether to continue pursuing cutting-edge semiconductor manufacturing, which may come at the cost of higher emissions, or to focus on less polluting alternatives.

The EU’s Chips Act and Its Potential

The European Union has already taken steps to support its semiconductor industry through the 2023 Chips Act, which was designed to encourage investment in new production facilities and reduce the continent's dependence on foreign-made chips. However, the Chips Act has not yet achieved its primary goal of bringing cutting-edge semiconductor manufacturing to Europe. The EU now faces a choice: whether to continue pursuing the high-emission path of advanced chip production or to focus on more sustainable, low-emission technologies.

Hess suggests that Europe should reconsider its approach and explore the benefits of prioritizing sustainable production. "Having chips produced with better environmental standards will turn out to be a long-term competitive advantage," she said. By leveraging Europe's access to renewable energy and cleaner production methods, the continent could position itself as a global leader in green semiconductor manufacturing, an area that is expected to grow rapidly in the coming years.

The Case for Sustainable Manufacturing

The case for focusing on sustainable semiconductor production in Europe is not only an environmental imperative but also an economic opportunity. As the world moves towards greener technologies, the demand for environmentally friendly chips is expected to rise. Europe, with its access to renewable energy sources and a strong manufacturing base, is well-positioned to meet this demand.

By emphasizing sustainable production practices, European companies could set themselves apart from competitors in Asia and North America, where chip production is often more energy-intensive. "Where we could increase our competitiveness is by strengthening EU companies that are already market-leading and manufacturing chips needed for the green transition," Hess added. This would allow European semiconductor firms to tap into a growing market while contributing to the global effort to reduce carbon emissions.

The Role of Renewable Energy and Water Access

One of the reasons Europe could have an edge in sustainable chip production is its access to renewable energy and water resources. Most cutting-edge semiconductor manufacturing takes place in humid subtropical climates in Asia, where energy costs are high due to the need for constant cooling and high levels of water usage. Europe, in contrast, has a more reliable supply of renewable energy, including wind and solar power, which could help reduce the carbon footprint of semiconductor production.

In addition to this, Europe’s access to water could also be beneficial, as semiconductor manufacturing requires significant amounts of water for cooling and other processes. By optimizing production in areas with abundant water resources, Europe could reduce the environmental impact of its semiconductor sector and improve its competitiveness on the global stage.

Challenges Ahead

Despite the advantages Europe has in terms of renewable energy and water access, there are still challenges to be addressed. The semiconductor industry is highly competitive, and it will require significant investment to transform Europe’s production capabilities. Furthermore, the push for cutting-edge chip production in Europe, while appealing from an economic perspective, could continue to exacerbate the environmental impact of the sector if not managed carefully.

Hess emphasizes the importance of balancing economic growth with environmental sustainability. "If the EU wants to continue with cutting-edge chip production, this will have a significant impact on the environment, given the higher energy consumption and emissions per wafer," she said. Thus, Europe must carefully consider its strategy and weigh the long-term benefits of sustainable production against the short-term economic gains of cutting-edge manufacturing.

The rising emissions linked to semiconductor production are a growing concern, and Europe has a critical role to play in addressing this issue. By focusing on sustainable chip manufacturing, the EU can not only reduce the environmental impact of its semiconductor industry but also position itself as a leader in green technology. While challenges remain, the shift toward more sustainable production methods could provide long-term economic and environmental benefits. As Julia Hess puts it, "Having chips produced with better environmental standards will turn out to be a long-term competitive advantage," and this could be the key to Europe's success in the global semiconductor market.