Europe should focus on sustainable chip production as sector emissions rise, study says

By Nathan Vifflin

AMSTERDAM (Reuters) - With pollution linked to the manufacture of cutting-edge computer chips needed for AI rising rapidly, the European Union should focus on developing its existing lower-emission semiconductor production, think-tank interface said on Monday.

In a review of pollution trends in the chemical-intensive semiconductor sector published on Monday, interface found the industry's energy use had risen 125% globally over the past eight years both as output rose and as cutting-edge chip production caused more emissions per chip.

"Mature" or "legacy" chips, such as those used in cars, electric grids and industrial applications, are generally less polluting.

"Where we could increase our competitiveness is by strengthening EU companies that are already market-leading and manufacturing chips needed for the green transition," Julia Hess, who led the research, told Reuters in an e-mail.

European chipmakers such as STMicroelectronics, Infineon and NXP are among the world's top firms at manufacturing those kinds of chips.

The EU is considering additional measures to support its semiconductor industry following the 2023 Chips Act, which helped spark investments in new production but failed to meet its primary goal of bringing cutting-edge manufacturing to Europe.

Hess said it was not clear if Europe should continue pursuing cutting-edge production.

"If the EU wants to double down on cutting-edge chip production, this will significantly affect the climate and environment (given these chips have much higher emissions and energy consumption) per wafer," she said.

If it does, arguments in favour include Europe's better access to water and renewable energy, she said. Most cutting-edge chips are made in humid subtropical climates in Asia, which adds significant energy costs to manufacturing. 

Hess said having chips produced with better environmental standards will turn out to be a long-term competitive advantage.

(Reporting by Nathan Vifflin and Toby Sterling in Amsterdam; Editing by Jan Harvey)