Chip Makers’ Guide: The CHIPS Act & California’s Senate Bills

Compliance Countdown: CHIPS Act and California’s senate bills – Here is how the chip makers can navigate new regulations 

The semiconductor industry is at a crossroads. On the one hand, it is one of the most important and fastest-growing industries in the world. On the other hand, the industry is also a major emitter of greenhouse gases. 

In recent years, governments around the world have been implementing new regulations to reduce greenhouse gas emissions. The semiconductor industry is no exception. In California, for example, two new bills have recently been passed that will have a significant impact on the semiconductor industry: SB 253 and SB 261.These bills aim to make companies more open about their impact on the environment by sharing details about their emissions with the public.  

If these bills become law, they will push businesses to actively deal with climate change. The proposed rules would make it mandatory for many California companies to report not just their different emissions but also reveal any financial risks related to climate issues. These new rules might start as soon as December 2024, highlighting the state’s strong commitment to making positive changes for the environment. 

In case of failure to follow the new bills, the companies will have to pay a fine of up to $500,000. The amount of the fine will depend on how bad the company was at following the law and how hard they tried to follow it.  

The company will not get fined for making honest mistakes in their emissions report, as long as they tried their best to be accurate and honest. However, if the company does not file their emissions report at all, they will get fined. 

SB 253: Driving Businesses Towards a More Sustainable Future 

Under SB 253, large companies in California must report their Scope 1, 2, and 3 emissions, regardless of whether they are private or public. 

This means that companies will have to report all the pollution that they produce, both directly and indirectly. This includes pollution from their own operations, as well as pollution from their employees’ commutes, the transportation of their products, and the supply chain. 

Reporting requirements will begin in 2026 for Scope 1 and 2 emissions, and in 2027 for Scope 3 emissions. 

SB 253 is a significant step forward for environmental protection in California. By requiring large companies to report their emissions, the state is making it easier to track progress towards reducing greenhouse gas emissions and to hold companies accountable for their environmental impact. 

These new regulations are set to pose a major challenge to the semiconductor industry. However, they also present an opportunity for the industry to invest in innovative technologies that can help them reduce their environmental impact and become more sustainable. 

In recent years, there have been several compliance updates in the USA that are driving the industry to adopt more sustainable practices. 

One of the most important compliance updates is the CHIPS Act. The CHIPS Act is a $52.7 billion investment in the semiconductor industry that aims to boost domestic manufacturing and reduce reliance on foreign suppliers. This act includes several provisions that promote sustainability, such as tax credits for investments in renewable energy and carbon capture and storage technologies.  

Inflation Reduction Act (IRA): A Catalyst for Sustainability 

The Inflation Reduction Act (IRA) is a landmark piece of legislation that is transforming the way businesses operate, including in the semiconductor industry. The IRA emphasizes the need for businesses to address financial risks associated with climate issues and encourages transparency and risk mitigation strategies. This presents a unique opportunity for semiconductor companies to position themselves as leaders in sustainability.  

One way that semiconductor companies can take advantage of the IRA is through the CHIPS Act, a $52.7 billion investment in domestic manufacturing. The CHIPS Act incentivizes sustainable practices through tax credits for investments in renewable energy and carbon capture technologies. This alignment of economic growth with environmental responsibility sets the stage for a greener future for the semiconductor industry. 

Here are some specific ways that semiconductor companies can integrate sustainability into regulatory compliance under the IRA: 

  • Optimize manufacturing processes to reduce energy consumption and emissions. 
  • Invest in renewable energy sources to power manufacturing facilities. 
  • Develop and implement waste reduction and recycling programs. 
  • Support research and development of new, sustainable semiconductor manufacturing technologies. 
  • Publicly disclose climate-related risks and financial information. 

By taking these steps, semiconductor companies can demonstrate their commitment to sustainability and compliance with the IRA. This will not only help them to avoid legal penalties, but it will also make them more attractive to investors and customers. 

Sustainability is no longer a luxury for semiconductor companies; it is a necessity. The IRA provides a clear roadmap for the industry to embrace sustainability and build a more resilient future. 

The future of business is sustainable. Are you on board? 

Semiconductor manufacturing is a very energy-intensive process. It accounts for about 5% of global industrial electricity consumption. Also, the chip manufacturing process also produces a significant amount of greenhouse gas emissions. The industry is responsible for about 2% of global greenhouse gas emissions. Companies that fail to invest in innovative technologies that can help them reduce their environmental impact will find it difficult to comply with these new regulations. They will also be at a competitive disadvantage, as customers are increasingly demanding products that are made in a sustainable way. 

AI-driven digital twins: The semiconductor industry’s secret weapons for sustainable operations 

Meeting compliance requirements poses significant challenges for the industry. However, the integration of AI (Artificial Intelligence) and digital twin technologies offers a promising avenue for the industry to reduce its environmental footprint and adhere to evolving regulations. 

AI proves instrumental in optimizing manufacturing processes, curbing waste, and enhancing energy efficiency. Simultaneously, digital twins can simulate semiconductor manufacturing facilities’ performance – discovering opportunities for emission reduction. 

Here are some specific examples of how AI and digital twins can be used to reduce emissions and comply with new regulations in the semiconductor industry: 

Energy Optimization: AI optimizes the consumption of energy, water, and chemicals in semiconductor manufacturing, pinpointing areas for reduced energy usage without compromising production quality.  

Yield Prediction: AI can predict yield rates and identifies potential defects, minimizing semiconductor wastage during manufacturing. 

Performance Simulation: Digital twins simulate manufacturing facilities, identifying areas for emission reduction, and enabling the optimization of layouts to minimize energy consumption. 

Compliance Planning: Digital twins aid in developing compliance plans by assessing the impact of new regulations on manufacturing facilities, facilitating the formulation of effective strategies for adherence. 

In leveraging these technologies, the semiconductor industry can navigate the complexities of compliance while actively reducing its carbon footprint.  

Eugenie: Helping you navigate the sustainability landscape 

Eugenie’s digital twins are helping the leading global semiconductor companies in reducing their environmental impact and comply with new regulations. The digital twins can be used to simulate the performance of semiconductor manufacturing facilities in real time and to identify areas where emissions can be reduced. The digital twins can also be used to develop compliance plans for semiconductor manufacturing facilities.  

To conclude 

The semiconductor sector grapples with various hurdles, from escalating expenses and supply chain disruptions to evolving regulations. Nevertheless, the integration of AI and digital twin technologies presents a transformative solution, enabling the industry to surmount these challenges and thrive.  

AI and digital twins offer the semiconductor industry avenues to curtail emissions, ensure compliance with new regulations, and pioneer innovative technologies. The robust capabilities of Eugenie’s digital twins position them as a potent instrument to aid the industry in attaining these objectives. 

As a linchpin of the global economy, the semiconductor industry assumes a crucial role in combatting climate change. Through the adoption of AI and digital twins, the industry can not only minimize its environmental footprint but also can also sustain its pivotal role in fuelling the worldwide economy.