- Semiconductor factories use millions of gallons of water daily.
- The more advanced the chip, the more processing and water are required.
- Chip fabs are developing ways to cut their footprint in response to regulation and water scarcity.
The boom in artificial intelligence is driving up chip demand, and the chip craze, in turn, is driving up demand for another resource: water.
According to an S&P Global analysis, the global semiconductor industry consumed as much water in 2021 as the city of Hong Kong. The average semiconductor facility uses millions of gallons of water per day to rinse out wafers and cool equipment.
Water consumption for chip fabs and data centers will rise as the demand for chips grows. The more advanced the chip, the more processing steps are required. Now, dryer climates and increased regulations are forcing factories to make efforts toward reducing their water footprint.
Chip production also consumes high amounts of water because it requires ultra-pure water, free from contaminants, bacteria, and ions. That's because wafers are highly sensitive to small particles that can disrupt the manufacturing process and cost companies billions of dollars.
"It's double jeopardy. As the chip sizes reduce, the amount of water required increases, but also the purity with which you need that water becomes more and more and more stringent," Prakash Govindan, cofounder and COO of water technology startup Gradiant, told Business Insider.
Intel has announced plans to become "net positive" by 2030, meaning that it restores and returns more water than it consumes through reducing freshwater use and funding watershed restoration projects. In 2023, it says it conserved and restored 13 billion gallons of water. A TSMC spokesperson told Business Insider that the company's chip fabs in Taiwan achieve a nearly 90% water recycling rate, and soon its American fabs will too.
Regulations become stricter
When Silicon Valley was still a major hardware industrial manufacturing center in the 1980s, companies like AMD, Philips, and Hewlett-Packard used a chemical solvent called trichloroethylene, or TCE, to clean semiconductors during processing.
The chip fabs stored the TCE underground, but tanks sometimes ruptured, leaking the chemical into the local groundwater and soil. Studies show that exposure to TCE can cause cancer and birth defects.
To this day, in Silicon Valley's Santa Clara County, there are 23 active superfund sites, a designation given to land that the Environmental Protection Agency deems to be too contaminated and requires cleanup.
Now, chip fabs must work with local governments to meet water management and waste disposal requirements. To receive funding from the new CHIPS and Science Act, fabs could face extensive federal reviews under the 1970 National Environmental Policy Act, which requires federal agencies to assess each project's potential environmental impact.
Already, Govindan said he's observed a spike in clients as a direct response to the CHIPS Act because of stricter liquid discharge mandates and a push to move semiconductor manufacturing back to the US.
Fabs face water scarcity
Water scarcity continues to be top of mind for chip companies.
During one of Taiwan's worst droughts in history last year, farmers complained about low reservoir levels and how the government decided to prioritize TSMC's factories rather than allocate water for crops. Arizona, the home of multiple Intel and TSMC fabs, continues to face a water shortage due to the Colorado River drought.
Several researchers are investigating ways to reduce and recycle water in chip manufacturing. For example, Paul Westerhoff, a sustainable engineering professor at Arizona State University, works with research teams to show chip manufacturers how to purify wastewater from processing chips and use it to wash the next chip.
TSMC has also been recycling its water. A TSMC spokesperson told Business Insider that for its proposed chip fab in Phoenix, 65% of the water used will come from in-house water recycling systems and used for air scrubbers and cooling towers. It plans to recycle at least 90% of its water by building an industrial water reclamation plant, which is an advanced water treatment facility.
"This means the fabs will be capable of reusing nearly every drop of water back into the facility," the spokesperson said, including reusing the water "back into the wafer manufacturing process."
Govindan says his water services startup, Gradiant, can help companies like Micron, AMD, and GlobalFoundries recycle more than 95% of water in some cases.
"If you cut the water consumption of the chip foundry by a 10th or by a 20th, it makes a huge difference in the water footprint," Govindan said.
While Nvidia does not have chip fabs, CEO Jensen Huang said its data centers, another energy and water-guzzling source, could be placed in more remote areas.
"There's plenty of water. It just happens to be undrinkable water, and so we could use water better. We can put data centers where there's less population," Huang said at a keynote address during SIGGRAPH 2024 in Denver on Monday.
Anuradha Murthy Agarwal, who leads a team at MIT's Materials Research Laboratory and conducts research on transitioning the microchip manufacturing sector more sustainably, said that one of the persisting challenges is a lack of standardization. Reports from different chip companies may define and measure "sustainability" differently.
"Everyone has different metrics for monitoring how sustainable they are. So, of course, every company is going to come up with a figure of merit that makes them look good," Agarwal said.
Agarwal hopes that, due to the industry's focus on innovation, companies will become more receptive to their research on minimizing energy and water consumption.
"Our industry is very used to change. Every 18 months, we double the number of chips on a wafer," Agarwal said. "So, if we find solutions in our industry to make our industry more sustainable, chances are some of these will percolate to other industries."