Gas shortage: semiconductor production threatened with three-year production stop

For almost five months now, Russia has been waging a brutal war of aggression against Ukraine. This is not only causing a great deal of human suffering. The economic impact is also likely to be severe in the long term. In particular, the great uncertainty of Russian gas supplies means that industry is already fearful of gas taps being turned off. The question now is whether the already struggling semiconductor manufacturing industry will also suffer from the impending gas shortage. As it turns out, this question is not so easy to answer because there is simply a lack of information.

No semiconductors in the event of a gas shortage

Wars in 2022 are fought primarily with embargoes and economic sanctions. The Ukraine war brings this to light more clearly than any other before. But the extensive sanctions imposed on Russia by the EU and USA out of solidarity with Ukraine are not only weakening the Russian economy. For some time now, inflation and rising energy costs have made it clear that we are also feeling the effects. For some weeks now, the focus has been on the security of gas supplies that Germany receives from Russia. While a heating ban for private homes and important facilities such as hospitals seems impossible at the moment, politicians are openly talking about the possibility of having to impose restrictions on industry.

In the meantime, just about every industry is afraid of this. The operators of chip factories in particular now seem to be shaking at the knees. After all, semiconductor production is known to have been extremely battered since the start of the Corona pandemic. Even European projects such as the EU Chips Act, which prompted Intel to build a chip factory in Magdeburg, will not solve the problem in the short term. Now the company Globalfoundries, which manufactures semiconductors in Dresden, is speaking out and painting a bleak picture for the future. For example, Yvonne Keil, head of procurement, says the fab won’t be able to produce wafers within the next three years if the gas tap is turned off. Disturbed by this statement, colleagues at Golem.de went looking for other companies to find out the possible impact of the gas crisis.

Gas shortage is super disaster for almost every industry

Golem.de contacted various German semiconductor producers as part of its research. These include not only Bosch, which only recently announced it was putting a billion-dollar sum into semiconductor production. The colleagues were also in contact with X-Fab, Infenion, Intel and Globalfoundries (GF). Out thereby exciting information came, which let one throw at least short views behind the scenery of the present situation of semiconductor producers. Bosch in particular was very talkative. The company told Golem.de that it is currently trying to develop extensive energy-saving plans. Bosch currently covers one-fifth of its energy needs with natural gas. Among other things, the traditional company sees savings potential in a change of heating technology. At X-Fab, the dependence on natural gas seems to depend on the particular location.

Ute Steinbrecher, the company’s press spokeswoman, told Golem.de that the factory in Erfurt only uses natural gas for heating. In Dresden, on the other hand, the company relies on gas for other important things, such as cleaning the exhaust gases. Of course, the impending gas shortage is not just a matter of heating safety. Many municipalities also rely on energy from natural gas-fired power plants for their electricity supply. However, municipalities and their utilities are already responding to provide greater independence. Statistics from the German Association of Energy and Water Industries show that electricity production has already been switched in many places to get away from gas as an energy source as much as possible.

The fear of investors

While Bosch and X-Fab were extremely forthcoming about their gas consumption to Golem.de, other companies were more reticent. The colleagues were unable to tease out any real figures from them. Among other things, this can probably be attributed to the fear of a tit-for-tat response from investors. After all, producers of semiconductors are experiencing a noticeable boom in view of the current shortage. If it now turns out that, in view of the gas shortage, production can only take place with the handbrake on or not at all, this should certainly put a noticeable damper on things.

By the way, Golem.de found the answer of Karin Raths, press spokeswoman of Globalfoundries, particularly astonishing. She only stated to the IT news website that the company is prepared for an emergency and that no restrictions in production are to be feared. This is very surprising, especially in view of earlier statements from GF. After all, although the company announced a change in energy supply in December 2021, this is still mainly based on gas as an energy source. A gas shortage would therefore have severe consequences here as well. After Golem.de’s inquiry, this press release then ominously disappeared.

A lack of energy alternatives led to a dead end

It’s really hard to blame the companies now for thinking they shouldn’t have turned to natural gas as an energy source in the first place. After all, one is always smarter in hindsight than before. On top of that, with such large factories, it is often not even in the companies’ hands which energy resources they could now use. Competitive pressure and regulatory limits dictate the direction in this area and cannot be ignored. It is possible that this is now changing in a painful way. But it all depends on the outcome, which will hopefully be achieved in the near future. Until then, companies can really only follow a few important rules of conduct, some of which also apply to private households. First, goal number one is to curb consumption. This requires savings such as those planned by Bosch. In particular, the focus must be on heating the premises.

Of course, you can also consider switching to other energy sources because of the lack of gas. However, this is not possible as quickly as in a private household. While a single-family home can become almost completely independent of gas with just a few steps using a combination of a heat pump and a photovoltaic system, the situation is currently different in industry. Of course, all factories could now equip their roofs with solar panels. However, since these are currently in greater demand than ever, they will not be available in large quantities. The same applies to heat pump technology. In this case, it is not only the heat pumps themselves that are in short supply. There is also a lack of specialists who can install them. Consequently, it is simply not possible for many companies to convert their energy supply from one moment to the next.

Missed opportunities for the energy transition

In conclusion, it must be noted that an earlier paradigm shift toward gas alternatives would have ensured greater independence from Russia and thus a lower risk of gas shortages. Particularly in the area of renewable energies, policymakers should have created many more incentives in recent years. The fact that they are still driving with the handbrake on in the energy turnaround is made clear, for example, by the lack of charging stations despite rapidly rising registration figures for electric cars. Not only more independence from energy suppliers, but also the ever-advancing climate change should have been reason enough for this.

Consequently, it is now up to politicians to finally create more incentives for renewable energies and to make not only private households, but above all industry as a major emitter of CO² gases, more environmentally friendly. And now it is becoming clear once again that apparently disaster always has to threaten first before political decisions of any consequence are made. It was the nuclear disaster at Fukushima in 2011, for example, that first persuaded then-Chancellor Angela Merkel to shut down the nation’s nuclear power plants. The Ukraine war could now become the counterpart in the area of natural gas.

Consequences could be severe

In the worst case, the affected semiconductor plants face a shutdown. What that would mean is certain. If the assembly lines are at a standstill, no semiconductors will roll off them either – and that for three years. The reason for this is the challenging clean rooms. These are equipped with sophisticated filter systems, which, however, are also considered to be real energy guzzlers. Once the systems are shut down, it is said to take three years to clean the air in the rooms again for semiconductor production. If this happens, there is still no end in sight to the semiconductor problem, and the dependence on Chinese production will grow and flourish.