Sustainability: The Key to Boosting ROI in Semiconductor Manufacturing

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Improving sustainability benefits semiconductor manufacturing’s bottom line

Semiconductor manufacturing is a capital-heavy industry. Building a single fab can cost an estimated $10 billion. To make the most out of these expensive investments, chip manufacturers are scrutinizing where they’re spending money. They typically base these financial decisions on quantifiable metrics like return on investment (ROI) to assess the financial viability of a project.  

Now that sustainability has become a global priority, a new factor in corporate decision-making has emerged: return on environment (ROE). The concept highlights the need to balance manufacturers’ profitability with their environmental impact.

ROI and ROE should both play a role in decision-making

Return on investment and return on environment are becoming interconnected in the semiconductor industry. Here’s why:

1. Cost savings: Sustainable manufacturing practices can lead to significant cost savings. For example, using energy-efficient processes and reducing resource consumption directly improves ROI by lowering operational costs, such as reducing electricity bills.
2. Regulatory compliance: The semiconductor industry is required to comply with many environmental regulations, such as rules related to water use and greenhouse gas emissions. In addition, some countries require manufacturers to disclose their climate-related risks. Non-compliance can lead to costly fines and sanctions.
3. Brand value and customer loyalty: Companies that prioritize sustainability can benefit from enhanced brand reputation and customer loyalty. Consumers and businesses are increasingly favoring environmentally responsible companies, which can lead to increased sales and market share.
4. Innovation and efficiency: Green practices can drive innovation. For instance, developing new, energy-efficient technologies can open up new markets and revenue streams, further boosting ROI.
5. Market demand: There is a growing interest in sustainable products. Research shows that meeting this demand provides a competitive advantage that leads to increased revenue, a larger market share, and faster growth than non-sustainably focused competitors.

• Long-term viability: Manufacturers that adopt environmentally friendly practices are supporting the long-term viability of resources. By reducing dependency on non-renewable resources and minimizing their environmental impact, companies can secure their supply chains and future-proof their operations.

• Investment attraction: Investors consider environmental, social, and governance (ESG) criteria when making choices. Companies with strong sustainability practices are more likely to attract investment, providing the capital needed for growth and innovation
• Risk management: Sustainability improvements can reduce risks associated with environmental damage, such as legal liabilities and cleanup costs. This risk management strategy is crucial for maintaining steady operations and protecting shareholder value

Energy efficiency improvements using AI/ML helped a large chip maker save $1.4 million in energy costs

A large semiconductor manufacturer’s sustainability initiatives are already paying off both financially and in environmental benefits. The chip producer’s energy efficiency efforts saved 13 GWh of energy at one of its sites, which is a financial savings of around $1.4 million.

The company is committed to driving sustainability while also lowering operational costs by optimizing energy costs. To do so, it is building a long-term partnership with Schneider Electric that is shaped around sustainability, efficiency, and resiliency.

For example, the manufacturer’s environmental improvements began with an energy efficiency study to evaluate the site’s energy savings potential. Based on that data, the company has taken significant steps toward sustainability advancements, such as implementing predictive energy solutions. This leverages artificial intelligence to improve the operational efficiency of significant energy use systems, reducing energy consumption and using analytics to detect consumption anomalies across various assets.

Learn more about how sustainability boosts business performance

By integrating ROI and ROE into business strategies, semiconductor manufacturers enhance long-term business viability while still addressing sustainability demands from stakeholders and consumers. Discover proven strategies to align ROI with sustainability goals. Explore how renewable energy, advanced analytics, and expert partnerships can transform your semiconductor operations.