On October 2, 2024, US President Joe Biden signed new legislation allowing semiconductor fabs funded under the CHIPS and Science Act to bypass federal environmental review requirements. This measure aims to accelerate the construction of chip manufacturing plants nationwide, reinforcing the semiconductor supply chain and boosting US industrial growth. According to Reuters, this law significantly advances the US's chip production expansion efforts by reducing approval times through the removal of federal assessment delays.
The Register highlights that bypassing environmental reviews benefits semiconductor firms by reducing plant construction times. However, this exemption doesn't address all challenges; US wafer manufacturing continues to face major power supply issues.
Semiconductor companies in the US encounter two main power supply challenges: securing sufficient grid electricity and converting alternating current (AC) to high-voltage direct current (DC) for precision equipment such as photolithography, ion implantation, and etching tools. Minor power fluctuations can result in millions of dollars in losses, underscoring the need for substantial investments in DC infrastructure upgrades and substations.
According to Tom's Hardware, semiconductor firms must tackle grid supply shortages while investing heavily in DC infrastructure upgrades, such as substations and power conversion systems, to ensure consistent and reliable power.
Renewable energy, particularly solar power due to its DC output, presents a potential solution for the semiconductor sector's power requirements. However, the high costs of building and upgrading renewable energy infrastructure pose challenges in quickly scaling to meet industry demands. Datacenter Dynamics reports that even short-term renewable integration necessitates significant investment and technical adaptations to maintain stable and reliable power for semiconductor production facilities.
Intel, a prominent player in US semiconductor investment, is partnering with utility providers to ensure reliable and sufficient power for its new US fabs. The Financial Times and the US Department of Commerce report that Intel plans to invest over US$100 billion in the next five years to expand operations in Arizona, Ohio, New Mexico, and Oregon. Intel is intensifying negotiations with the US government, aiming to secure a US$8.5 billion subsidy under the CHIPS Act by the end of 2024.
Micron, set to receive approximately US$6.1 billion, is collaborating with local governments and energy providers to improve grid infrastructure around its new sites. The company is also exploring renewable energy options, including wind and solar, to sustain its semiconductor production and provide a continuous power supply, as noted by Visual Capitalist and PC Gamer.
Beyond power supply issues
The National Environmental Policy Act (NEPA) of 1969 requires all federal projects with potential environmental impacts to submit an Environmental Impact Statement (EIS). Although new legislation seeks to accelerate the construction of semiconductor plants, it has raised concerns among environmental groups such as the Sierra Club.
The Sierra Club cautions that these exemptions could increase the risk of hazardous chemicals like PFAS contaminating the environment. These persistent "forever chemicals" are resistant to degradation and can accumulate in ecosystems. The organization urges the government to uphold strong environmental safeguards alongside industrial expansion.
Even with federal exemptions under the CHIPS Act, state-level environmental regulations remain applicable for semiconductor fabs. Companies may face additional challenges in complying with state requirements. For example, Micron's New York facility must adhere to the Clean Water Act and state-specific rules, including the State Environmental Quality Review Act (SEQR). The US Army Corps of Engineers and state agencies will review Micron's project to confirm compliance with federal and state water quality and wetland preservation standards. This includes formulating mitigation plans for environmental impacts during construction.
While the CHIPS Act aims to fast-track semiconductor growth, monitoring the long-term environmental and power impacts of these projects is essential to balance economic development with environmental sustainability.
