How Semiconductor Chips Contribute to Your Scope 3 Emissions: IC Packaging

‍This article is part two of a two-part series examining how semiconductors and the energy-intensive semiconductor manufacturing process contribute to the scope 3 emissions of original equipment manufacturers (OEMs) and other businesses.  ‍

As we move into the middle of the decade, sustainability and the environmental, social, and governance (ESG) framework have evolved into far more than just ephemeral movements, lofty rhetoric, or aspirational ideals that fail to take substantive root. That these complementary concepts are now propulsive forces in the corporate world is primarily due to two factors. One, there is a slow but steady expansion of government regulations worldwide that are imposing new requirements on businesses to calculate their carbon footprint, practice due diligence along their supply chain, and instill robust internal governance mechanisms. Two, there’s a gathering consensus among the key stakeholders of public corporations and other large businesses that organizations should be holding themselves accountable through reporting on their sustainability efforts to the public (and, where applicable, their respective governments).

In many cases, the ESG reporting measures companies are now expected to perform include in-depth carbon accounting—and, more specifically, calculating scopes 1, 2, and 3 emissions. For those not familiar with this increasingly standard accounting method, these three emissions scopes cover both “direct emissions” that a company releases into the atmosphere with their own equipment and activities, and “indirect emissions” that are not released by the organization itself but can be traced back to its manufacturing and operations along the value chain. 

A company’s scope 3 emissions are the most complex and challenging carbon accounting category for a number of reasons. As a so-called “cradle to grave” emissions assessment, scope 3 is a deep, all-encompassing bucket, covering both upstream and downstream activities connected to the organization, including everything from raw material extraction to end-of-life management. As a result, arriving at an accurate calculation of a company’s scope 3 emissions can be an exhaustive, expertise-driven process. It’s also typically many times larger than either scope 1 or 2, covering 15 distinct categories established by the GHG Protocol. If original equipment manufacturers (OEMs) in industries like automotive, consumer electronics, and aerospace and defense want to start conceptualizing the breadth of their carbon footprint and strategize ways to gradually reduce it, they need to begin familiarizing themselves with scope 3. 

Semiconductor Emissions: the “Scope” of the Challenge

While scope 3 emissions are comprised of a slew of different suppliers, activities, materials, and parts, few facets of the category are more impactful to an OEM’s carbon footprint than semiconductors. 

The work that goes into producing semiconductors—including both the fabrication process and back-end manufacturing steps like packaging and assembly—requires an enormous volume of energy and resources. Doping silicon, etching dense, mazelike integrated circuits, running powerful and precise manufacturing equipment, and meticulously maintaining specific temperatures conditions and high degrees of sterilization in cleanrooms all demand extremely high energy outputs. The water used throughout these processes, meanwhile—which must be purified to an extremely high degree to ensure no contaminants taint the aforementioned steps—introduces yet another strain on natural resources. 

A 2021 SupplyChainBrain article on the chip industry’s carbon footprint cited data showing that the sector’s largest firms were rapidly overtaking automotive manufacturers in terms of their greenhouse gas (GHG) emissions, water consumption, and hazardous waste. A nanotechnology researcher who studies emissions calculations in the sector told the publication, “The general trend is the energy consumption is increasing, the water consumption is increasing as all chips become more and more complex.” These patterns in energy use, as well as other climate-related disclosures in recent years, have come to paint the semiconductor field as one of the highest-polluting industries on the planet. 

In the first part of this series, we looked at how chips contribute to the scope 3 emissions of original equipment manufacturers (OEMs) and other businesses by analyzing the carbon emissions of three of TSMC’s largest fabrication facilities. Our intention was to introduce readers to the degree to which the semiconductors used in their products are enlarging their carbon footprints, while also beginning a larger process of mapping out how energy use is distributed across the electronic component supply chain. In this article, we want to continue this line of investigation by focusing on the back-end stages of the semiconductor manufacturing process—namely, IC packaging. 

Analyzing Carbon Emissions in Semiconductor IC Packaging 

Packaging is the final stage of the semiconductor manufacturing process. During this step, the integrated circuit is encapsulated in a protective case that shields it from corrosion, contamination, and other environmental factors that could damage the chip while also functioning as an electrical bridge between the device and a larger electronic system (like those encased within a smartphone or laptop). As Cadence Design Systems explains on its site, the package “is a foundation for the electrical contacts that establish connections between the device and a circuit board.”

While there’s been growing scrutiny in recent years of the swelling carbon footprints of semiconductor foundries and their fabs, the back-end stages of making chips are also worth paying attention to. For this follow-up to our examination of the emissions of fabrication facilities, we wanted to focus on the carbon reporting figures of two of the largest packaging companies in the chip industry: ASE Technology Holding and Powertech Technology. 

ASE Technology Holding 

ASE Technology Holding is the largest IC packaging and testing company in the semiconductor industry. The firm’s revenue for 2023 was $19 billion, and it holds nearly 20 percent of the market share in the outsourcing semiconductor assembly and test (OSAT) sector. The firm offers an array of sophisticated packaging solutions, including “flip-chip, wire bonding, WLP, and SiP.”

In 2023, ASE Technology Holding reported scope 1 emissions of 68,432 metric tons CO2e, and scope 2 emissions of 1,499,405 metric tons C02e. The IC packing firm also reported on its scope 3 emissions: at 8,992,577 CO2e, the measurement was over 130 times larger than the emissions released directly by the company. In addition to looking at the carbon footprint for the business as a whole, we also drew on Z2Data’s internal research to obtain emissions data for individual facilities. The table below provides carbon accounting data for two of ACE Technology’s highest-capacity factories. (As with the first article in this series, we referenced nonprofit global disclosure platform CDP for the topline emissions data.) 

Powertech Technology Inc. 

Headquartered in Taiwan, Powertech Technology Inc. (PTI) is another leading OSAT firm. PTI reported 2023 revenue in excess of $2.2 billion, and the company continues to serve as the world’s largest provider of memory chip packaging and testing services. In addition to IC assembly, PTI also specializes in chip bumping, chip probing, and burn-in (a semiconductor testing process in which chips are exposed to regular operating conditions, including thermal and electrical stress, to assess functionality and detect potential points of failure). 

Although the Taiwanese company’s carbon emissions do not approach the size of ASE Technology’s—to say nothing of the historically large carbon footprints of top foundries—its emissions scale up significantly in the scope 2 and 3 categories. While PTI’s scope 1 emissions for 2023 were a relatively modest 14,381 metric tons CO2e, indirect emissions connected to electricity the firm purchased from the grid ticked up to 328,260 metric tons CO2e (scope 2). Finally, the company’s scope 3 emissions—encompassing all upstream and downstream activities across the value chain—were reported at 314,329 metric tons CO2e. Further data on location-specific carbon reporting for two of PTI’s most productive plants are provided in the table below. 

How IC Packaging Firms Compare with Other Industries 

The carbon emissions for what are among the world’s largest IC packaging corporations don’t come close to approaching the scale of energy use in semiconductor manufacturing. Foundries like TSMC and GlobalFoundries regularly report scope 1 emissions well into the seven figures and—as the first article in this series demonstrated—often run individual fabs that release more CO2 than the entirety of many public companies. 

Nevertheless, in the broader context of the corporate world, the carbon footprint for firms like ASE Technology and PTI are comparable to large original equipment manufacturers (OEMs). Take Acer, for example, a Taiwanese consumer electronics firm that manufactures laptops, tablets, and other tech hardware, and grosses around $8 billion a year. In 2023, the OEM reported scope 1 emissions of 2,705 CO2e, and a scope 2 total of 14,342 CO2e—figures that are both dwarfed by the OSAT businesses discussed above. Focusing on a manufacturer on the other end of the energy-use spectrum, Boeing last year reported scope 1 emissions of 642,000 CO2e. The aerospace manufacturer’s scope 2 numbers, meanwhile, were 779,000 CO2e. 

In other words, while IC packaging firms may not release as much direct greenhouse gases (GHG) as some of the larger manufacturing industries, their substantial electricity use puts their scope 2 figures on par with other large-scale polluters. The primary takeaway here is that it’s not just the hyper-intensive semiconductor manufacturing operations that are ballooning scope 3 emissions for OEMs—the OSAT processes embedded in chip production are also meaningful contributors to their upstream footprint. 

The scope 3 emissions landscape and the seismic impact semiconductors have on it will be of growing consequence to businesses over the second half of the decade. ESG and sustainability regulations are expanding worldwide, and the public expectations attached to carbon reporting are following a similar trajectory. A recent report by the MSCI Sustainability Institute found that as of May 2024, 47 percent of publicly listed companies disclosed some scope 3 emissions—a figure that represents a jump of over 20 percent from just two years ago. 

It’s only a matter of time before accounting and reporting on scope 3 emissions becomes the norm for OEMs. Firms that reject that solidifying expectation and decline to make such public disclosures will become outliers, vulnerable to unfavorable third-party ESG assessments and negative public perception. Understanding the emissions landscape of your complete value chain—including and perhaps especially the disproportionate role semiconductors play in it—is crucial to preparing for these growing ESG responsibilities. 

How the Latest Technology Can Illuminate Your Sustainability and Environmental Impact 

Companies that utilize the electronic component supply chain and want to gain a deeper grasp of their ESG performance will find a myriad of valuable functionality in supply chain risk management (SCRM) platform Z2Data. The tool uses proprietary databases and unique algorithms to create effective estimates of the CO2 emissions of millions of electronic components, including both semiconductor devices and interconnect, passive, and electromechanical (IP&E) parts.. This vast repository of environmental data provides customers with a powerful resource for starting the process of calculating scope 3 emissions. 

Z2Data’s Compliance Manager also provides OEMs with comprehensive compliance analysis on everything from products and components to direct suppliers and sub-tier manufacturers. To learn more about Z2Data and the ways its tools can bolster your business’s sustainability, supply chain visibility, and risk management, visit the website or schedule a demo.