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Many people have forgotten how prescient Taiwan Semiconductor Manufacturing Co. (TSMC) Chairman Morris Chang was two years ago when he foresaw the electricity threat Taiwan currently faces.

At the end of 2015, when then President Ma Ying-jeou visited TSMC’s facility in the Central Taiwan Science Park, Chang said Taiwan’s biggest worry was power shortages and predicted the country could face electricity rationing in 2017.

“That would have quite a big impact on industry,” Chang said at the time.

When asked follow-up questions by reporters, Chang said the impact of a power outage on TSMC would be “almost inestimable.” He noted that every TSMC foundry has reserve power, but it costs three times more than the electricity supplied by state-run utility Taiwan Power Co. (Taipower), and if there were long-term power rationing, it “would be really tough.”

Taiwan caught a glimpse of those potential problems in mid-August when its operating reserve margin fell below 2 percent on two occasions, almost necessitating rationing, and then didn’t have the reserves to prevent a major power outage when human error caused the Tatan gas-fired power plant to shut down temporarily on Aug. 15.

When Chang has spoken publicly in the recent past, he has almost invariably brought up the topic of “electricity.” So what is it that has him so worried? The answer came in an environmental impact assessment report on the expansion of the Southern Taiwan Science Park in Tainan approved by the Environmental Protection Administration (EPA) on Jan. 18 this year.

46% Increase in Electricity Usage

TSMC is planning to locate its advanced 5-nanometer foundry in the Southern Taiwan Science Park, which will increase demand for electricity and water far beyond the capacity the park was designed for. Under such circumstances, the park was required by law to conduct a new environmental impact assessment.

The assessment found that the new TSMC plant, expected to enter mass production in 2020, will increase electricity demand in the park by 46 percent, from 1.52 gigawatts (1 gigawatt = 1 million kilowatts) originally to 2.22 GW after TSMC moves in.

According to documents the park provided to the EPA, TSMC’s 5-nanometer plant will need an estimated 720 megawatts of electricity, roughly equal to the increase in power the park applied for.

Semiconductor production inherently requires large amounts of electricity, and that won’t change even if TSMC invests heavily in energy conservation every year. Wafer foundries may use the most advanced technologies and sophisticated chemicals, but they are also energy-devouring beasts.

According to its 2016 corporate social responsibility report, TSMC consumed 8.85 billion kilowatt-hours of electricity in 2016, up 11 percent from the previous year. (It was also 4.2 percent of all the electricity sold nationwide by Taipower.)

The 11 percent increase was consistent with TSMC’s sales growth. Since returning as TSMC CEO in 2009, Chang has repeatedly pledged to investors that the company will post double-digit increases in sales every year, and power consumption was always likely to mirror that pace of growth.

Consequently, over the past five years, TSMC has aggressively expanded capacity, and its share price and sales have repeatedly set new records. But over that same period, electricity consumption has grown 102 percent, making it one of the biggest “contributors” to increases in Taiwan’s overall power consumption.

A Power-devouring ‘Savior’ on the Way

Bureau of Energy statistics show just how big a role TSMC has played. Of the 6 percent growth in industrial power usage in Taiwan during the five-year period, more than half came from TSMC. The company also accounted for just over a third (33.6 percent) of the country’s overall growth in electricity consumption over that time.

In addition, the pace at which power usage by the world’s largest pure-play foundry increases in the future is only likely to accelerate with the huge changes in store for semiconductor production technology.

The second-generation 7-nanometer process that TSMC expects to go into mass production in 2019 – known as “7 Plus” – will make use of extreme ultraviolet (EUV) lithography for the first time. Seen as the “savior” technology the semiconductor industry has long been waiting for, EUV lithography has a wavelength of only 13.5 nanometers, and chip makers are hoping it will allow them to extend Moore’s Law another 10 years.

Moore’s Law says computing power tends to double every two years as miniaturization allows more transistors per square inch on an integrated circuit, but many in the industry have recently proclaimed the law dead because of limitations of materials and production processes.

Investing an Amount Equal to Two A380s

In January 2017, in the same week that the environmental impact assessment related to TSMC’s 5-nm foundry was approved, the only manufacturer of EUV lithography production equipment in the world, ASML, announced at an investor conference that it had received orders for six EUV lithography machines.

A report in the financial weekly Barron’s cited an analyst who said TSMC had ordered five of them at a cost of US$550 million, about what it would cost to buy two of the world’s largest passenger aircraft – the Airbus A380.

Besides being extremely expensive, this game-changing EUV lithography technology has another major shortcoming – it consumes a lot of electricity.

How much? “An incredible amount,” says a nervous Arthur Chuang, the senior director of TSMC’s 300mm Fabs Facility Division. In an interview with CommonWealth Magazine at a press conference in March, Chuang said the less TSMC used of the EUV technology the better because “it is too expensive and uses too much power.”

ASML has yet to disclose how much power one of its EUV machines consumes, but SK Hynix, the world’s second-largest memory chip maker, said at an EUV Symposium in 2009 that EUV’s wall-plug efficiency (the efficiency at which a system converts electrical power into optical power) is only 0.02 percent. That number has since become conventional wisdom in the industry.

It means that powering the most advanced 250-watt EUV source will require 125 MWs of electricity, 10 times the amount consumed by the argon fluoride lasers commonly used in semiconductor production today.

“To compress light into such a short wavelength, you need a really, really strong source of power,” Chuang says.

In fact, equipment makers have fallen far short of the EUV output power required by semiconductor makers, and has been seen as the main cause of repeated delays in getting EUV lithography to the market.

Cooling System also a Question Mark

Just five years ago in 2012, ASML could only achieve source power of 25 watts, but it announced last month at the 2017 Semicon West semiconductor exhibition in San Francisco that it had achieved the 250-watt milestone. At that level, foundry operators can achieve throughput of 125 wafers per hour, the minimum requirement of chip makers such as TSMC and Intel. Current lithography systems support throughputs of 200 or more wafers per hour, but they cannot achieve the miniaturization TSMC and Intel are shooting for in their new processes.

So why was it so hard to increase EUV source power?

Huang Sheng-lung, a professor in National Taiwan University’s Department of Electrical Engineering who previously collaborated with TSMC on EUV research, says the main culprit is heat dissipation. Huang’s experimental EUV module at NTU has a power output of only a milliwatt (0.001 W), but the cooling system takes up a full room. Considering that chip makers intend to use EUV machines with massively bigger power outputs, dissipating the heat will be a complex technical challenge. They will also have to contend with the reality that, “cooling systems also consume a lot of energy,” Huang said.

TSMC Mulled Building a Power Plant

If nothing else, EUV technology will have major ramifications for users’ power consumption. During the Southern Taiwan Science Park environmental impact assessment process, a TSMC manager gave a presentation that explained how big that impact could be.

Based on power consumption per unit of land area, the manager said, the 5-nm foundry will use 48 percent more power than a mainstream 28-nm foundry.

“And only half of the production in the 5-nm plant will use EUV technology,” says an analyst for a foreign brokerage. He explained that because of the prohibitive expense of EUV technology, TSMC will save the EUV process for only its more difficult jobs. But when the semiconductor sector moves into the next-generation 3-nanometer process, seen as the extreme limit of Moore’s Law, EUV lithography will be used a much higher percentage of the time, causing another spike in electricity consumption.

In June 2016, Premier Lin Chuan revealed for the first time that TSMC was interested in building its own power plant. According to the analyst, TSMC was worried that introducing the 5-nm process using EUV lithography would require a supply of power far exceeding the Southern Taiwan Science Park’s capacity, but the company dropped the idea when Taipower guaranteed it could meet TSMC’s needs.

That the idea was even in play raised plenty of eyebrows. A former TSMC manager said the company’s corporate culture puts an emphasis on sticking to its core business, and the idea of building its own power plant “wouldn’t have even been brought up in the past. For TSMC to consider the idea shows how extremely serious the power supply problem is.”

There is widespread speculation that TSMC is thinking of locating its 3-nanometer foundry in the United States, and the main reason, along with questions about land availability and an environmental impact assessment, is the need for a stable source of electricity.

At TSMC’s second quarter investor conference, co-CEO Mark Liu said the decision on the location of the 3-nm foundry will be made in the first half of next year, and as of now Taiwan is still being given priority.

The process of commercializing EUV lithography, requiring an industry-wide investment in R&D estimated by one insider at US$20 billion, has been described by some as the semiconductor sector’s gambit to “put a man on the moon.” But for Taiwan, the question of whether it can deliver the electricity needed to satisfy TSMC’s big appetite in the future may be every bit as daunting a task.

Translated from the Chinese by Luke Sabatier

