Taiwan’s leading chip foundries, Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC), are unaffected so far by water shortages in Taiwan, thanks to the companies’ efforts in recent years to institute resource-reuse programs.
Rainfall in Taiwan is at the lowest level since 1947, according to the government’s Water Resources Agency, which in November last year started restrictions on water use in two parts of the island where most of the fabs run by TSMC and UMC are located. If conditions worsen, as is likely this year, a new round of tighter restrictions will limit water supplies for industrial and public use.
Still, TSMC and UMC, which account for more than half of the world’s foundry production for customers such as Apple and Qualcomm, have taken steps to increase their water reuse after drought conditions in Taiwan became an issue for chipmakers more than a decade ago.
“We have inquired on the water situation in the past for TSMC, but they normally indicate they can navigate pretty well and avoid production stoppages due to proactive water resource management,” Credit Suisse Taiwan Head of Equities Research Randy Abrams said in an email on January 26. “They cite the ability to recycle close to 90 percent of their water in the process.”
UMC’s water-recycling rate is also close to 90 percent, according to company spokesman Richard Yu. “Our water-recycle rate for each fab is 85-87 percent for water used in process manufacturing,” Yu said in a January 26 email.
Water supply has become a critical and urgent issue for semiconductor companies due to the effects of climate change, according to a UMC statement on risk management that Yu provided with the email.
“I don’t see this creating an issue at UMC and TSMC,” said Mark Li, senior research analyst, Asian semiconductors, with Sanford C. Bernstein in Hong Kong.
“Water resource management and allocation has become an important issue in many countries due to the impact of global climate change,” TSMC said in a statement on its website.
The changes in rainfall in between dry and rainy seasons in Taiwan have become increasingly extreme since 2009, and the risk of droughts and floods has become increasing apparent. These developments have highlighted the importance of water resource management, water saving and water-shortage, emergency-response programs.
Since 2008, a number of TSMC fabs have achieved a process water-recycling rate of higher than 90%, leading the global semiconductor industry, according to the TSMC website. “Our total process water recycling rate reached 86.5% in 2012,” according to TSMC.
UMC’s overall water recycling rate is 60-70, according to company spokesman Yu. The company’s newer 12-inch fabs incorporate newer green-building technologies, he added.
Taiwan is prone to typhoons, earthquakes and water shortages, all of which can impact the island’s chip production.
In recent decades, investors have started fabs in Singapore and China to offset the risk that natural disasters in Taiwan could pose to global semiconductor production. Nevertheless, the island’s position in the global chip industry remains strong due to its well established infrastructure in chip design, fabrication and assembly-and-test.