Samsung Electronics, TSMC go all out to cut carbon emissions

[Photo by Yonhap]

Global chip giants, including South Korea’s Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. (TSMC), are intensifying their efforts to reduce carbon emissions and promote the use of renewable energy sources, in line with an overall industry trend towards carbon neutrality.

According to sources on Tuesday, TSMC, the world’s leading foundry, announced its intention to accelerate its “RE100” initiative, which aims to transition 100 percent of its energy consumption to renewable sources.

The company plans to achieve this milestone by 2040, ten years ahead of its previous target of 2050.

In addition to advancing its RE100 commitment, TSMC has increased its renewable energy goal for 2030 from 40 percent to 60 percent.

TSMC said it proudly stands as the first semiconductor company to join RE100, underscoring its dedication to renewable energy as a key business strategy.

TSMC’s decision to expedite its plans coincides with the one-year anniversary of Samsung Electronics’ “New Environmental Management Strategy” announcement, where Samsung pledged to achieve carbon neutrality by 2050. TSMC’s new commitment surpasses Samsung’s plan by a decade.

TSMC’s active stance is driven by growing demand from its global customers for carbon-neutral practices.

Major clients of TSMC, including Apple Inc. and Microsoft Corp., have made renewable energy utilization a condition when placing chip orders.

Microsoft has committed to reducing greenhouse gas emissions from its supply chain, known as Scope 3 emissions, by more than half by 2030, while Apple has declared its goal to achieve carbon neutrality by 2030.

Semiconductor companies are employing a dual-track strategy to meet customer demands, first by transitioning from conventional fossil fuels to renewable energy sources.

Companies like Samsung Electronics and SK hynix Inc. have adopted the use of Renewable Energy Certificates (RECs) as a means to prove their commitment to renewable energy.

By purchasing RECs, companies receive recognition for the proportion of energy they have transitioned to renewable sources.

As of last year, Samsung Electronics sourced 31 percent of its energy from renewable sources, successfully converting all major overseas facilities in the U.S., Europe, India, China, and Vietnam through RECs.

TSMC actively leverages Power Purchase Agreements (PPAs) to procure energy directly from renewable energy generation companies. In 2020, TSMC entered a PPA with Danish wind power company Ørsted for nearly 1 gigawatt (GW) of capacity over 20 years, marking one of the largest PPAs in history.

PPAs offer the advantage of a stable power supply at fixed prices over extended periods, typically spanning 10 to 20 years.

One of Samsung Electronics’ primary challenges is its operations in Korea, where renewable energy production, including solar and wind power, falls significantly short of demand.

Moreover, with the completion of semiconductor fabs currently under construction in Yongin and Pyeongtaek, both in Gyeonggi Province, the power requirements are expected to increase exponentially by 2050.

The Korean government is considering the construction of liquefied natural gas power plants to meet the anticipated 10GW demand in the proposed Yongin semiconductor cluster.

Consequently, Samsung Electronics is directing its efforts toward developing technologies to reduce carbon emissions at the semiconductor manufacturing stage.