[Chiptalk] Samsung and SK Semiconductors Leading the Way to a Carbon-Neutral World...

Securing Ultra-Low Power Technology
Beyond Carbon Reduction to Marketing Tool
Challenges Including Scope 3 Completion

Samsung Electronics Hwaseong Campus. (Photo by Samsung Electronics)

[Asia Economy Reporter Moon Chaeseok]

"We will utilize all available means such as Power Purchase Agreements (PPA), green tariffs, and Renewable Energy Certificates (REC) purchases to maximize the expansion of renewable energy." Song Dugun, Vice President and Head of Environmental Safety Center, Samsung Electronics DS (Semiconductor) Division

"We are creating changes toward a better future by using recycled plastics in more products and improving the energy efficiency of new products." Jung Inhee, Executive Director of Sustainability Management Promotion Center, Samsung Electronics

"We will reduce 1% of the global carbon reduction target by 2030." Chey Tae-won, Chairman of SK Group

From the end of last year to early this year, up to the world's largest electronics and IT exhibition CES, Samsung Electronics and SK Hynix have been competitively proclaiming 'carbon neutrality (net zero)'. ESG (Environmental, Social, and Governance) management, with the 'E' standing for environment, has become a key topic in the semiconductor industry.

Samsung Electronics DS Division's 'E management' can be found in the 'New Environmental Management Strategy' announced company-wide last September. The DS Division declared its commitment to achieving net zero by 2050. As part of this process, it joined RE100 (committing to 100% renewable energy for corporate electricity use). This project covers the energy needed to manufacture products solely with renewable energy such as solar and wind power. It is a significant challenge that requires bearing enormous cost increases and risks. By 2040, the division plans to complete a system that treats and discharges air and water pollutants to a 'natural state,' meaning a level with minimal negative environmental impact. In the medium term, the goal is to secure ultra-low power semiconductor manufacturing technology within two years. Ultra-low power semiconductors are a core project aggressively pursued by both the industry and the government.

SK Hynix's net zero strategy can be found in 'Eco Vision 2022.' It has set and is implementing a plan to reduce greenhouse gas emissions by 40% compared to the 2016 Business As Usual (BAU) forecast by last year. The company aims to increase waste recycling rates to 98% and raise water reuse to 20 million tons annually. It also joined RE100 early in 2020. The vision includes policies for utilizing renewable energy production at domestic and overseas sites. SK has the advantage of easily sharing renewable energy procurement know-how through energy-specialized affiliates like SK Innovation E&S.

In theory, net zero is achieved when the net carbon emissions are reduced to '0 (zero),' so why are semiconductor companies, which are not traditional heavy industries, so proactive in carbon reduction? It is because if they do not reduce power consumption to handle the exploding data demand, costs will increase significantly. From this perspective, achieving net zero can be seen as managing business risks. The 'semiconductor winter' caused by the recession last year and this year made companies keenly aware that consumer demand can drop anytime, causing inventory to pile up in warehouses. If production costs also rise, there is no solution. According to market research firm IDC, the global data volume, which was 33ZB (zettabytes, 1,000 trillion bytes) in 2018, is expected to increase by about 60% annually to 175ZB by 2025. Carbon reduction through decreased power consumption has become essential not only for environmental protection but also for enhancing corporate brand value and attracting buyer (customer) investments.

There are many challenges. Applying the 'Scope 3' stage, which pursues carbon reduction beyond product manufacturing to the consumer usage phase, is not easy. Scope 3 is also a global ESG disclosure standard certified by the UK International Financial Reporting Standards (IFRS) Foundation. Both companies are known not to have established a Scope 3 system yet. Samsung Electronics even acknowledged the difficulty of securing Scope 3 when announcing its new environmental management strategy last year. Kim Sujin, Vice President of Samsung Electronics ESG (Environmental, Social, and Governance) Strategy Group, said, "Samsung's policy is to complete setting specific reduction targets for 15 items and then announce a detailed roadmap at an appropriate time." Both companies were listed as members of the Semiconductor Climate Consortium established by the International Semiconductor Equipment and Materials Association (SEMI) in early November last year. They stated they would report Scope 3 as consortium members. However, neither company has yet released a completed Scope 3 strategy, including specific company-level Scope 3 disclosure items, annual emissions, or carbon credit trading strategies.

This content was produced with the assistance of AI translation services.