The semiconductor industry is expected to grow to a staggering $1trn by 2030, according to research by McKinsey, underlining the key role these basic building blocks of modern computing have in facilitating the green transition globally, through their fundamental role in the development of green technologies.
Yet advances in semiconductor technology are also creating substantial environmental costs. By 2030, the technology sector is expected to reach 7% of global electricity demand under an optimistic scenario, with the expected scenario being 20% of global demand. A significant proportion of all carbon emissions which come from the technology sector emanate directly from the manufacture of semiconductors.
The need for energy efficiency improvements to accelerate within the technology sector are vital as we transition away from fossil fuels. But given semiconductors are crucial in the generation, storage, distribution, and consumption of electrical energy, managing this paradox from a sustainability perspective will be a key part of the green transition.
Greener technologies
Growth in demand for semiconductors is driven by the automotive, data storage and industrial electronics sectors.
Many green technologies are heavily dependent on semiconductor technology, such as wind turbines and solar panels. Semiconductors enable renewable energy to be harnessed, converted, transferred, and stored as electricity and then moved onto the grid with a minimum loss of power.
Semiconductors are key to the production of electric vehicles (EVs). Central to every EV is a high-tech power electronics system, with semiconductors at the heart. Semiconductors facilitate the conversion of electrical energy from the battery into power that drives the vehicle, while also managing energy efficiency and the overall performance of the car. Semiconductors not only ensure our roads are safer, they also provide the backbone of the technology needed to decarbonise the automobile sector.
Data centres are an important area of focus, given their significant growth and the likely continued expansion in the age of Artificial Intelligence (AI). To train AI models, companies pack thousands of GPU chips into datacentres and run them all at full capacity for extended periods of time, which consumes tremendous amounts of electricity. Data centres alone now consume more than 1% of global energy demand, eclipsing some countries.
Efficiency strategies
The easiest way to reduce the environmental impact of technology usage is to power it from renewable energy. Energy efficiency strategies have been notably effective in cutting the day-to-day operating-related emissions from the sector, but manufacturing and infrastructure-related emissions have now become the dominant driver.
Semiconductor companies need copious amounts of energy to manufacture chips. Much of the problem lies in the fact that 90% of the world’s chipmaking capacity sits in Taiwan. As an example, semiconductor giant TSMC uses 6% of the entire island of Taiwan’s annual power, and this is set to rise.
The centrepiece of semiconductor power and efficiency is Moore’s Law, a prediction made in 1965 by the co-founder and former CEO of Intel, Gordon Moore, which suggested the number of transistors on a chip – which is made up of semiconductor material – would double every two years and be 20% to 30% cheaper to make.
While it started as a prediction, the industry adopted it as a roadmap. It allowed companies to formulate long-term strategies, even if the design upon which it rested was impossible, as Moore’s Law would ensure it become possible within a predictable timeframe. In 1975, semiconductor chips contained 40,000 transistors, nowadays microchips contain tens of billions of transistors.
Moore’s Law has enabled a thousandfold improvement in energy efficiency, and without it there would not be enough power available on earth to power the technology industry. Technologies which enable Moore’s Law are key drivers of the theme of energy efficiency within the technology industry.
Sustainability challenge and solutions
There is no doubt that energy transition will be a key market driver over the coming decades, with the migration to a different energy mix being driven by a combination of environmental and geopolitical factors.
The key challenge of the semiconductor industry is to use digitalisation in key areas such as the transportation system and the industrial sector in a way that provides clear overall benefits from an energy in versus energy out point of view.
Semiconductors are a crucial part of the shift to a more sustainable economy. The green transition is dependent upon these powerful devices, perhaps more than any other technology. The environmental cost, however, of the growth in computing and from the manufacture of these chips, is skyrocketing, at a time when we are looking to curb carbon emissions dramatically.
We must focus on those parts of the industry that arm the green transition, and those players that help drive efficiency, such as Cadence Design, whose EDA software offering allows chip makers to design more efficient and powerful chips; and Infineon, whose power semi-conductor chips are crucial in the design of modern EVs and wind and solar technologies.
Companies such as these ensure we continue to move technology forward, while also achieving the crucial goals on decarbonising our economy and decoupling the link between growth and damaging the environment.
