According to industry insiders, the recent large-scale power outages in Taiwan, China, have made foundries worry again that not only will there be insufficient power supply during the peak summer season, but also more power outages without warning.

According to the "Electronic Times" report, citing sources, a large-scale power outage in Taiwan on March 3 disrupted power supply to 5.5 million local households and businesses, although it had little impact on semiconductor makers, including TSMC in the Hsinchu Science Park. , factories operated by Taiwan Science and Technology Park, but they were almost "scared in a cold sweat".

In foundry automated material handling operations, very brief power outages can also lead to huge losses of wafer scrap. As renewable energy is in the early stages of development and there are no other solutions for the foreseeable future, power shortages and blackouts could become the new normal in Taiwan. In addition, force majeure such as earthquakes or droughts will bring huge challenges to the manufacturing operations of TSMC, UMC, PSMC and the world's advanced and other local semiconductor supply chain manufacturers.

The semiconductor boom triggered by the epidemic has lasted for more than two years, but it has not cooled down, and the foundry industry is still in its heyday. TSMC and local peers together account for nearly 70 percent of the global foundry market, but they also face growing geopolitical risks that are putting pressure on operations, the sources said. The local semiconductor supply chain has taken steps to guard against power restrictions and blackouts. In addition to efforts to expand backup power generation capacity, manufacturers are also keen to increase purchases of renewable energy and improve energy efficiency.

For example, TSMC signed a 20-year corporate green power purchase agreement (CPPA) with Osted, the company's largest renewable energy deal to date. The agreement allows TSMC to obtain full power generation from the 920MW Greater Changhua 2b&4 offshore wind farm that Osted is building in central Taiwan. TSMC has initially set the renewable energy adoption rate for the new 3nm fab at 20%, and gradually increased the adoption rate to 25% and 100% for all manufacturing plants and non-production facilities in order to achieve its ESG (environmental, social and , governance) goals.

However, TSMC's renewable energy utilization remains relatively low for now, and variables such as power outages and shortages will plague the foundry giant and other semiconductor and electronics makers, the source said.

TSMC is currently the largest electricity consumer company in Taiwan. According to statistics, the company's electricity consumption in 2020 will be 16 billion kWh, accounting for 5.9% of Taiwan's annual electricity consumption of 271.1 billion kWh. According to sources, since the power consumption of EUV lithography machines is more than 10 times that of DUV lithography machines, TSMC has been actively looking for energy-saving solutions for EUV lithography machines through big data analysis, but it can only improve energy efficiency by 5%. .

The source emphasized that as TSMC's capacity expansion in major technology parks in Taiwan, China is already at a high-speed development stage, the company will soon install 3nm/2nm EUV lithography machines, which will consume more power, and the power supply will be insufficient or Instability will present the company with the greatest production risk.

On the other hand, tight supply has also become a pressing issue in Taiwan's semiconductor supply chain. Although TSMC and other major producers continue to provide regular water transportation support, implement water conservation and develop new water resources, the current reservoir is still at full water level, and the source continued that it is difficult to guarantee the rain-free weather caused by the months of 2021. Water shortage will not happen again in 2022.

Taiwan, China has a complete industrial cluster, high-quality human resources and cost-effective production advantages, but it is difficult for the semiconductor industry chain to solve the potential water shortage, power shortage and earthquake crisis. Since there are no clear signs of improvement in power supply and construction of new power plants will take some time, it is difficult for major power users in the semiconductor industry, such as TSMC, to ensure adequate power supply.

From this perspective, TSMC can at least diversify production risks through these plans, despite pressure from all parties to enforce overseas expansion plans, the sources added.