The Tech Industry Faces a Climate Change Threat: Taiwan's Drought Highlights Vulnerabilities

A recent declaration from the government of Taiwan regarding its capacity to maintain water supplies for the nation’s crucial chip manufacturing sector, amidst an unprecedented drought, underscores the direct and significant threat climate change poses to the technological landscape.

Taiwan's Water Crisis and Semiconductor Production

As detailed in a Bloomberg report, Taiwanese President Tsai Ing-wen addressed the public via Facebook on Sunday, outlining the nation’s efforts to ensure adequate water availability for both citizens and businesses. This came in response to the most severe drought Taiwan has experienced in over five decades.

The government affirmed its commitment to maintaining sufficient water reserves to guarantee uninterrupted semiconductor manufacturing by industry giants such as Taiwan Semiconductor Manufacturing (TSMC).

These chips are fundamental to the operation of the entire tech industry, and any disruption to their production could trigger widespread and damaging repercussions for the global economy. Existing supply chain limitations have already led to production halts at major automotive manufacturers like General Motors and Volkswagen.

US Response and the Need for Domestic Manufacturing

The Biden administration has consistently stressed the importance of bolstering the United States’ semiconductor manufacturing capabilities. This emphasis was formalized last month with the issuance of an executive order aimed at resolving the ongoing chip shortages impacting manufacturing facilities nationwide.

A Wake-Up Call for the Tech Ecosystem

“Taiwan’s water scarcity and its impact on semiconductor production serves as a critical warning for every technology investor, every entrepreneur, and the entire venture capital community,” stated Vaughn Blake, a partner at the energy investment firm Blue Bear Capital. “It exemplifies complexity theory in action, demonstrating that scalable, data-driven solutions, rapidly implemented across substantial industrial markets, represent our only viable path forward.”

Long-Recognized Vulnerabilities

The potential for Taiwan’s water challenges to severely affect the semiconductor industry is not a new concern. It was previously identified in a 2016 Harvard Business School case study analysis. TSMC is proactively working to mitigate its water usage.

As early as 2016, TSMC had already implemented improvements to its water purification and recycling processes – a necessity for an industry that consumes between 2 to 9 million gallons of water daily. Intel, for instance, utilized 9 billion gallons of water in 2015 alone. The Harvard case study indicated that some of TSMC’s fabrication plants had achieved industrial wastewater recycling rates of up to 90%.

Increasing Water Demand with Advanced Chip Technology

However, as Moore’s Law continues to drive the miniaturization of components and increase the demand for greater precision and purity in manufacturing, water consumption at fabrication plants is actually increasing. Next-generation chips could require as much as 50% more water, necessitating enhanced recycling efforts.

Innovation in Water Management

For startups, a key focus should be on developing methods to reduce the cost and improve the efficiency of wastewater recycling and desalination – both of which are becoming increasingly energy-intensive processes.

Several companies are already pursuing these innovations. Blue Boson, based in the UK, claims to have developed a quantum-based water treatment technology, though its assertions border on the speculative. However, their website highlights collaborations with leading research institutions. Fido, also from the UK, specializes in leak detection to minimize water waste, while Pontic Technology and Micronic, both American firms, are focused on developing water and fluid sterilization systems.

Numix, a purification startup, is designed to remove the heavy metals inherent in industrial manufacturing processes. Divining Labs, located in Los Angeles, utilizes artificial intelligence to improve the prediction and management of stormwater runoff, maximizing water resource collection.

Climate Tech is Now Core Tech

“Upton Sinclair observed that ‘It is difficult to get a man to understand something, when his salary depends on him not understanding it,’” Blake of Blue Bear Capital noted. “For all founders and investors, it appears that all technology is, for the foreseeable future, climate technology – or there may be no technology at all.”

Early Stage Event Announcement

Early Stage is the leading event providing practical guidance for startup entrepreneurs and investors. You will gain insights directly from successful founders and VCs on building businesses, securing funding, and managing portfolios.

Sessions cover all aspects of company development: fundraising, recruitment, sales, product-market fit, public relations, marketing, and brand building. Each session includes dedicated time for audience questions and discussion.

Use code “TCARTICLE” at checkout to receive a 20 percent discount on tickets here.