Nvidia Supplier Taiwan Semi Faces Water Shortage Challenge as Chip Production Demand Soars
Taiwan Semiconductor Manufacturing Co (NYSE:TSM) and peer semiconductor companies are facing increasing risks of water shortages as they progress to more advanced processing technologies, according to a report by S&P Global Ratings.
Semiconductor manufacturing, essential for producing chips for devices like smartphones and TVs, demands substantial water usage to cool machinery and clean wafer sheets meticulously.
The report highlights a direct correlation between the sophistication of semiconductor chips and water consumption, CNBC reports.
As chipmakers move to more advanced semiconductor nodes, such as TSMC’s shift to 16-nanometer processes, their water use per unit has surged by over 35%.
This growing thirst for ultra-pure water, necessary for rinsing wafers through numerous fabrication steps, poses potential risks to the global tech supply chain, especially considering TSMC’s critical role in producing approximately 90% of the world’s advanced chips for AI and quantum computing.
The report suggests that in the face of water limitations, TSMC and similar companies might prioritize the production of high-margin advanced chips over less profitable mature chips, potentially enhancing earnings despite increased water consumption.
TSMC has made a significant leap in its global expansion by opening its first chip plant in Japan in Kumamoto, a move aimed at diversifying supply chains amid escalating U.S.-China trade tensions.
