Wed, Nov 09, 2022 page8

• Chip sector must boost renewables deployment

  • By Chang Hsun-ching 張勳慶
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  Recent discussions about Taiwan Semiconductor Manufacturing Co (TSMC) have focused on a potential 1-nanometer fab in Taoyuan’s Longtan District (龍潭) and the global chip industry’s “de-Taiwanization” due to a US-China row. Little attention has been paid to a recent report on international supply chains and carbon emissions, which says that TSMC’s renewable energy ratio is only 9.2 percent.

  This is low, but the figure for manufacturing giant Hon Hai Precision Industry Co is lower at 5.17 percent. Pegatron Corp did not disclose any figures. In overall grades based on the companies’ progress toward reducing emissions and increasing renewable energy use, Hon Hai and Pegatron received a D+ and a D- respectively.

  The renewable energy ratios of TSMC’s rivals — Intel and Samsung Electronics — are even more striking at 82 percent and 20.46 percent respectively.

  One of TSMC’s major clients, Apple Inc, has said that its supply chain would be carbon neutral by 2030, and demanded that its suppliers commit to using clean energy. How can Taiwan’s renewable energy help TSMC meet that demand?

  TSMC has tried to source its renewable energy needs in Taiwan, but the government’s green energy policy has created more ecological and environmental issues. It has clashed with not only the livelihoods of fishers and farmers, but also the well-being of local residents, while unscrupulous energy suppliers and politicians are rubbing their hands in anticipation of the opportunities to make money.

  The carbon credit trading system cannot be a long-term plan. It allows those who have not reached the standard to trade with those who have, leaving the system open to being misappropriated as a “greenwashing” tool. Due to the climate crisis, the guidelines for carbon credit trading would become stricter and the cost of buying carbon credits would increase, which would lead to a loss of revenue and advantages in chipmaking. Through carbon credit trading, TSMC’s investment in research and design in technology and patents would contribute to the revenues of companies that trade carbon credits. This is why some traditional sector firms, such as Taiwan Cement, have focused on developing renewable energy.

  Suppliers would only be able to stay in business if they can meet the standards of consumer electronics brands. If they fail to do so, the business would go to their rivals. It is worth reconsidering former Academia Sinica president Lee Yuan-tseh’s (李遠哲) criticism of President Tsai Ing-wen (蔡英文) on energy transition in Taiwan. For companies trying to enter the European and US markets, things are now more challenging than ever. For them, especially those relying heavily on energy, the government must set up metrics for the ratio of self-consumption. Spending money extravagantly is not a solution to meet the demands for more renewable energy use. Worse, it would be a death sentence for smaller firms unable to produce energy for self-consumption. This would become not merely an issue about green energy, but would also involve economic matters and the job market. Companies that do not take the adoption of green energy seriously would eventually find it difficult to secure loans, while mutual funds would be adjusted and corporate stocks sold off.

  To tackle these problems in Taiwan’s chip industry, it is necessary to pay more attention to the cutthroat competition that has resulted from a call for more renewable energy use. Only in doing so can the nation control its foundry sector, which, in the face of an energy crisis, is confronting questions about its survival. If the nation keeps focusing exclusively on demand planning or the US-China row, it would be left vulnerable.

  Chang Hsun-ching is a former librarian