Hsinchu, Taiwan – A crane flies over a silent rice field, while water flows slowly in the background. This is a quiet and stereotypical image of an East Asian countryside. There seemed to be little sign that I was only a few kilometers away from one of the centers of the global economy.

This is Hsinchu, a small city in Taiwan near Taipei. This is what you call the Silicon Valley of the world.

Just a few kilometers away from the tranquil rice fields, huge buildings rise from the ground, and air conditioners are perpetually humming amid the bustling traffic. These factories produce the silicon chips, or semiconductors, that make our smartphones, computers, and even artificial intelligence (AI) systems like ChatGPT work.

However, the two worlds of tranquil nature and high-tech manufacturing increasingly collide on the island.

Taiwan leads the world in computer chip production.

Taiwan Semiconductor Manufacturing Company (TSMC) is Taiwan’s largest chip manufacturer. By the third quarter of 2024, it had captured 64% of the global semiconductor market, according to research firm Counterpoint.

South Korea’s Samsung Foundry, the second largest manufacturer, only accounts for 12% of the market share.

The chip manufacturing industry occupies a large proportion of Taiwan’s economy, accounting for 25% of Taiwan’s gross domestic product (GDP). According to research at the time, TSMC’s market value in 2020 was equivalent to half the size of Taiwan’s economy.

When it comes to chip manufacturing, it seems that few countries can surpass Taiwan. However, the success of semiconductors also raises sustainability issues.

Chip manufacturing consumes large amounts of water and energy and emits waste gases through chemicals. According to a recent report by S&P Global Ratings, TSMC alone consumes about 8% of the island’s electricity.

“After the petrochemical industry, the electronics industry is Taiwan’s largest emitting industry,” Jiawei Zhao, research director at the nonprofit Taiwan Climate Action Network and an adjunct assistant professor at National Taiwan University, told Al Jazeera.

“Semiconductors are also a rapidly growing industry, which is concerning to say the least.”

This has even brought them into conflict with farmers near Taiwanese chip factories.

In 2021, during a drought, the Taiwanese government stopped irrigation on farms so large chip factories could use the saved water. Now there are growing concerns that solar farms powering chip manufacturing could take over farmland.

“There seems to be a lack of systematic analysis of the environmental impact on semiconductor production,” Josh Lepawsky, a professor of geography at Memorial University of Newfoundland in Canada, told Al Jazeera.

“This is a serious mistake.”

“Crazy” artificial intelligence

While the issue of water use at chip factories has attracted widespread international attention in the past few years, on the island it is considered old news. Semiconductor manufacturers already recycle much of the water they use, and governments have invested in more water infrastructure since the drought of the past few years.

Today, Taiwanese are concerned about the industry’s energy use. Artificial intelligence has made huge breakthroughs in the past few years, driven by large-scale language models from American companies such as OpenAI and tools such as ChatGPT. This revolution is driven by chips manufactured primarily in Taiwan.

The hype around artificial intelligence has in turn sent Taiwan’s massive chip factories into overdrive.

“The AI ​​market is getting crazier than ever,” Lena Chang, Greenpeace East Asia campaigner, told Al Jazeera.

“Because of this, energy use in the semiconductor industry is becoming a major issue in Taiwan as emissions increase and there may even be shortages.”

Amid all the madness, climate may have been forgotten. “The main goal now is to develop artificial intelligence and related supply chains,” Zhang said.

“Energy is not a big issue. The government should be more active in developing sustainable energy.”

slow renewable energy

One of the key issues is Taiwan’s energy market. Taiwan is currently phasing out its nuclear reactors. However, the construction of solar and wind energy has lagged behind.

“Taiwan is still heavily dependent on fossil fuels,” Zhang said. “More than 80 percent of our energy supply comes from natural gas and coal.”

According to the Energy Administration, only 11% of Taiwan’s energy supply will come from wind, solar and hydropower between September 2023 and August 2024.

The declining share of nuclear power contributed another 5.6%.

In 2016, the Taiwanese government set a target of 20% renewable energy by 2025, but it will almost certainly fall short of this goal.

Offshore wind, for example, is lagging behind government targets. In 2018, Taiwan awarded contracts to install 5.7 gigawatts (GW) of offshore wind power by 2025.

By 2024, the government has lowered its target and hopes to achieve the target of 2.56GW to 3.04GW that year.

“Offshore wind is progressing well until 2022. However, in the next few rounds of auctions, Taiwan is trying to get cheap energy and a high degree of localization of the supply chain,” said Raoult, managing director of renewable energy consultancy NIRAS Taiwan Raoul Kubitschek told Al Jazeera.

Wind energy in particular complies with Taiwan’s localized rules. The Taiwanese government requires a large percentage of wind turbines and other components to be produced locally.

However, local production is not growing fast enough.

“You can’t build a new supply chain that quickly,” Kubitschek said. “Taiwan only built its first commercial-scale offshore wind farm in 2017. It takes time to create a domestic wind energy industry.”

Solar energy has also encountered obstacles. Rooftop solar energy on the island is basically saturated. Larger solar farms, in turn, have been embroiled in controversy over land disputes. Groups such as farmers fear they will encroach on farmland, sparking protests and lawsuits.

Zhao Jiawei hopes to reverse this situation.

He has led pilot projects where farmers themselves install solar panels on their land. “We should not force farmers to sell their land or stop farming to install solar panels,” Zhao told Al Jazeera. “We should allow a combination of the two. We need to regain the trust of farmers.”

However, currently Taiwan’s energy market still relies on fossil fuels. At the same time, the semiconductor industry’s energy use is increasing rapidly.

This is a problem faced by semiconductor manufacturers. They are pressured by customers to go green.

Apple, a major buyer of TSMC chips, wants its large supplier to commit to using 100% renewable energy by 2030 – a goal that’s still far away given current trends.

Electricity prices in Taiwan are also rising rapidly, and the threat of power outages is growing.

Kubitschek said broader changes were needed in Taiwan’s energy market, including loosening localization policies, reforming licensing and reviewing the role of state-owned energy company Taipower.

However, Kubitschek said such reforms may be far off. Greenpeace, meanwhile, wants to get around this conundrum and demand companies like TSMC build their own sustainable energy installations.

chip bill

However, Taiwan’s semiconductor manufacturing problems are not unique.

Governments such as the United States and the European Union want to produce more chips locally due to COVID-19 and related shortages of key commodities such as semiconductors.

Although US President-elect Donald Trump has harshly criticized the US Chip and Science Act, both the US and the EU have passed legislation to support domestic chip production.

Both the United States and the European Union are now experiencing similar problems to Taiwan.

In the United States, for example, new chip factories are being built in drought-prone areas. TSMC is investing $12 billion to build a factory in the Arizona desert.

That’s a bad plan, says Memorial University of Newfoundland’s Lepasky.

“The (U.S.) CHIPS Act does not account for water use. That will cause problems in the future.”

Concerns about the environmental impact of chip manufacturing are also growing in Europe.

In 2022, the European Union announced that it wanted to increase Europe’s share of the global semiconductor manufacturing market to 20% by 2030, prompting TSMC and Intel to unveil plans for new factories in Germany and Poland (Intel has since delayed the plan as it seeks to control serious economic losses).

According to a study by research firm Interface, if Europe is to meet its 20% production target, the continent’s semiconductor emissions will increase eightfold, conflicting with other policy plans such as the Green Deal.

chip gas

Researchers are also concerned about another climate impact of semiconductors.

In addition to water or energy use, semiconductor manufacturing produces greenhouse gases. In complex manufacturing processes, the process itself generates its own emissions.

These emissions are known as Scope 1 emissions, said Emily Gallagher, director of the Sustainable Semiconductor Technologies and Systems (SSTS) program at Belgian research institute Imec. TSMC is one of the member companies of the Imec SSTS program.

“During the etching process, we use plasma to selectively remove material to build tiny structures in the chip. The etching process typically uses gases such as the fluorinated chemical CF4,” Gallagher told Al Jazeera. “CF4 has 6,500 times the global warming potential of CO2.”

According to Imec’s calculations, for ordinary chips, about 10% of production emissions fall into Scope 1. Reducing these emissions means adapting highly complex semiconductor manufacturing procedures to improve gas utilization by improving process efficiency and, where possible, replacing existing gases and reducing their use.

“Currently, Scope 1 emissions do not dominate emissions associated with semiconductor manufacturing,” Gallagher said. “But its importance will increase dramatically as factory energy supplies are decarbonized.”

Back in Taiwan, energy use is still the focus of everyone’s attention.

Taiwan is at the center of the global AI hype, producing not just chips but even systems to cool the hot-running servers used to train AI models. Whether local energy markets can cope with this remains to be seen.

“We need more ambitious goals and the means to achieve them,” Zhang said. “The power shortage is a real concern right now. Large power users like semiconductor companies need to be held accountable.”

This article was supported by the Pascal de Cros Foundation.