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Right now, TSMC Arizona's completed Fab 21 Phase 1 consumes about 18,000 cubic meters of water every day. That's about 4.75 million gallons of water every day. And there are two more phases coming up. Semiconductor manufacturing is water intensive, and that has made some people anxious about TSMC's arrival to the Arizona desert. More than a few people have asked, don't these fabs use a ton of water? Why are we building them in the desert? The answer, of course, is that Phoenix offers TSMC certain things that are not easily found elsewhere. Water is scarce there, sure, but it's not impossible to find. The amounts are manageable and it can be recycled. Some claim the facility is stealing water from farmers, saying you can't eat chips or well, technically it can. The implication being we can only have one or the other. I don't think that's true. Farms use way more water than tsmc. In today's video, I want to revisit the Fab in the desert and take a dip into the water situation. To quote an unforgettable scene from the TV series King of the Hill, Phoenix is a monument to man's arrogance Phoenix is located in the Sonoran Desert, which covers parts of Arizona and California and as well as the Mexican states of Baja California and Sonora. The Phoenix area gets about 295 days of sun each year, substantially higher than the national average. But it does rain there usually in two parts of the year. During the winter and early spring, there are consistent amounts of low intensity rainfall. And during the late summer months there are these sporadic but intense monsoons that can dump enough rain to cause local flooding. Broadly speaking, however, there's not enough rainfall to sustain human settlement. The City receives about 7 to 9 inches of rain each year, which to compare, is about as much as what the Taiwanese city of Hsinchu might get in a normal average month during its wettest seasons. And most of the rain evaporates under the intense sunshine anyway. It's estimated that less than 3% of rainfall turns into actual runoff. Fortunately, there are other water sources. The area's geography comprises of alternating valleys between mountain ranges, something we call basin and range. These mountain ranges are not high, seldom rising more than 300 to 600 meters above their surroundings, but can precipitate a little water. Prominent mountain ranges in central Arizona and New Mexico play a bigger role. At 8,000ft they can collect snow. Melting snowpack then feeds the Gila and Salt rivers. And these two rivers have anchored human settlement in the Phoenix Basin area. For centuries, Arizona's water comes from three sources. First, there are the rivers coming down from the aforementioned mountains in the Gila, Salt and Verda rivers. This water is pretty salty, however, and requires treatment. Second, water is pumped out of aquifer several hundred meters underground. And like the aquifers of Saudi Arabia, this is mostly fossil groundwater deposited millions of years ago. Though there is some recharge. Largely speaking, once you use it, it's gone. The aquifers were heavily pumped in the early 1900s. Though the state government knew about the rapid groundwater depletion situation since at least the 1930s, it was not until 1980 that laws were finally passed to address it. In exchange for doing that, the US Federal government funded a massive diversion canal called the Central Arizona project. Opened in 1993. It moves an allocation of water from the mighty Colorado river to the state's largest population centers. This allocation is negotiated with other basin states like California, New Mexico, Wyoming, Utah and Colorado. But the mighty Colorado river itself has its embarrassing moments from time to time, imposing water cuts on the states thusly proportions shift year from year. But in 2020, 36% of Arizona's water came from Colorado, another 18% from the in state rivers, and 5% is reclaimed water, which leaves the gap to be filled with groundwater. The latest statewide water usage number reported by the Arizona Department of Water resources is unfortunately from 20 about 7 million acre feet of water. In case you are wondering like I was an acre feet measures how much water it takes to fill an acre of water about a foot deep. So that is roughly 326,000 gallons, or 1,233 cubic meters. Metric tons of water. Cubic meters and metric tons when measuring water are one to one. How convenient. I'll call it the former. So 7 million acre feet translate to 8.6 billion cubic meters, or 2.28 trillion gallons, or 305,000 million cubic feet, or 48 billion koku of water. Are you loving this metric imperial inconsistency? Feel free to complain in the comments. Back in 1980, 90% of the demand for this diverted Colorado river water was agriculture, and that proportion has somewhat declined as the state's urban areas have grown. Phoenix is America's fifth largest city by population. The metropolitan area has about 4.8 million people per the 2020 census and still adds tens of thousands of new people each year. Fortunately, aggressive water pricing, conservation programs and other efforts have reduced per capita usage. The average Venetian uses 29% less water in 2019 than they did in in 1990. It has kept water production stable even as the city's population has vastly risen. But the state's largest water consumer is still agriculture 72% of the state's water demand per a 2019 statistic. And you can't just cut these farmers off from their water. It's still an important part of the state economy, contributing about $30 billion of the state's $570 billion total GDP. 35% of the state's land is for farming, clustered in the Southwest and Central regions. And while Most farms are small, 75% have revenues under 25,000. They employ hundreds of thousands of people. Moreover, 56% of these farmers are Native Americans who have been farming for hundreds of years and see it as a crucial part of their culture. They are entitled to their rights. Trickier still, Arizona, like the rest of the southwestern United States, is experiencing a megadrought. I do not want to exaggerate its enormity, but this drought has lasted for 30 years and there hasn't been one so bad in at least 500 years. The state's organizations and business communities are of course, aware of the sensitivity of the water situation. The Arizona Commerce Authority's presentations at SEMICON West 2025 take pains to emphasize how there is plenty of water available for semiconductor conductor use. The City of Phoenix also says on their website that they have been certified by the state to have a 100 year supply of water, meaning that a century of water is physically and continuously available for use. It's very Singapore, which I like. Per the city's 2021 Water Resource Plan, the city sources 98% of its water from surface river sources, so that includes the Colorado river allocation plus the Salt and Virta Rivers. The city also runs a network of five large water reclamation plants with a combined capacity of 2.45 million cubic meters of water each day for backup. The city also has 22 groundwater wells that are capable of providing about 121,300 cubic meters of water per day. There are also some underground aquifers that can get charged for future use. I reckon that the water for TSMC's phase one comes from those sources. The city even began the $250 million drought pipeline project to deliver water from the Salt and Verde Rivers to the North Phoenix area to bolster resilience. Considering how much residential and industrial development is planned around the TSMC fab. However, it is ultimately necessary that the FAB start recycling and reclaiming. I'll get to that in a bit. Pulling out On a more statewide basis, there are hard questions to face about the future role of agriculture. The state's two biggest crops are alfalfa and cotton, with corn, lettuce and wheat following thereafter. Alfalfa and cotton are particularly thirsty crops, and we generally don't eat them. And I hear a portion of the hay is exported to Saudi Arabia. That's interesting. The burdens of the state's changing water conditions will ultimately fall hardest on such farmers. They will either have to change what or how much they plant, plus move away from wasteful flood irrigation, and the state must aid them in doing so. For a look into how the water situation will roll out in Arizona, it's worth taking a look at TSMC in Taiwan. Per the 2024 Sustainability Report, TSMC in Taiwan consumed about 259,000 cubic meters or metric tons of water each day. So 94.5 million cubic meters of water for the whole year. For all their fabs in Hsinchu, Taichung and Tainan science parks, yeah, it's a big number, but only 1.09% of Arizona's statewide 2017 water demand. And remember, this is all of TSMC's Taiwan fabs. Side note, I've noticed that's often asserted online that TSMC uses so much water in Taiwan that they have to truck in water. I quote one Reddit comment in 20232023 and they forgot about the water issue. Especially since Hsinchu has to truck in water tons of water for their plants due to drought problems in Taiwan. I don't want to pick on a random person on the Internet, might not even be a person, but this gets dragged out every so often like as if it is still going on. Let me talk about it. On the whole, Taiwan gets and has enough water, which the issue is that like with everywhere else, water availability is regional. Taipei and other northern regions like Yilan get more it's pouring in Taiwan Taipei right now as I write this. The central and south areas are far drier and also host major industrial and agricultural sectors. They and Hsinchu are more apt to water reductions or saving measures by the Taiwan government. And unfortunately they depend on typhoons to fill their reservoirs. And 2021 was an unusually typhoonless year, the worst in 56 years. Reservoir levels fell to 5% and the government cut off irrigation to 46,662 hectares of farmland. During these times, various companies in Taiwan, including tsmc, brought out the water trucks to move water around. It's not clear how many trucks were used, nor how widespread it was. The 2021 drought eventually lifted and Taiwan has since gotten plenty of typhoons. An illustration of how the climate's complexity defies our demands for simple answers. Right now the reservoirs are mostly in the mid 90% ranges, with an occasional odd duck at 50% or so. I want to break down what is going on inside the fabs themselves because it is interesting. Over 75% of a Fab's water usage is for the manufacturing process. Most of the remaining about 20% or so is for the scrubber, kitchens, toilets and cooling. Diving further into the process category, about two thirds of the water used are for two wet cleans and chemical mechanical polishing or cmp. What is a wet clean? This is where you clean contaminants like particles, metallic and ionic residues and organic residues off the wafers surface using ultrapure water. Wet cleans can be done either with a big water tank or with spray rinsing. The latter is where the wafer is spun at a high speed and cleaned by dribbling water and chemicals onto them. Chemical mechanical polishing involves polishing the wafer using both mechanical and chemical means to get a wafer surface smoother than you can get with either. It involves pressing down a rotating wafer onto a flat rotating metal disc called a platen. Then a slurry of nano sized abrasive particles suspended in a solution of corrosive chemicals is dribbled onto the platen. Voila. Smoother than a baby's bottom. Reduce, recycle, Reuse so how do we reduce the amount of water that these fabs use? Regarding wet cleans, fabs can use more spray cleaning. It uses 20 times less water than a bath based wet clean. Rinse times can also be optimized to save water. Methods do exist to clean wafers without water. One well known dry clean method is plasma ashing where reactive oxygen or fluorine plasma removes residue like photoresist. It's expensive and energy consuming but saves water. Regarding cmp, there are various patent filings on separating wastes out of CMP wastewater. One 2002 patent notes the use of a coagulant and reaction tank to flock out copper atoms and create cleaner water. Things can also be done at a tool level. Equipment vendors are always coming up with new ideas, tricks and add ons to save water and be more energy efficient. It's up to the fabs to push for such measures and invest the money and downtime to implement them. TSMC says that they use each drop of water 3.5 times so water from tap gets turned into ultrapure water for critical uses. That wastewater is then treated and used for less critical uses, and so on until it finally enters the cooling towers for evaporation. The company has pledged that by 2030, over 60% of the total water consumed by its fabs will be reclaimed water. This has pushed the company to find ways to bring reclaimed water into the fabric. One bold method mixed reclaimed water with processed ultrapure water and used the mix in the 5 and 3nm nodes. One of the key aspects of water amelioration in the semiconductors has been water reclamation plants. Intel pioneered this method in Phoenix, and their work, in my opinion, sets a high bar for water stewardship. In 1989, they started a water recycling program that they said would save 11 million gallons, or 41,635 cubic meters of water during the summer and roughly half that in the winter. Then, in 1994, intel partnered with the Chandler Local government to build a large reverse osmosis water treatment plant to purify industrial wastewater to drinking water purity. This plant has since expanded and used its excess capacity to purify wastewater from other places and return it to the city's water sources. In 2020, they returned 95% of the water they take out from the tap. To ameliorate water issues, TSMC and the Taiwan government have built reclamation plants across the island. TSMC's first was in Tainan, the site of their biggest fab, which suffered perhaps the worst during the drought. In September 2022, TSMC opened their reclaimed water plant in the Tainan Science Park. It treats industrial wastewater from the fabs to supply 10,000 cubic meters of water each day. Later expanded to twice that, and notably it features a recent breakthrough to filter out urea, which TSMC says was a critical roadblock to using reclaimed water in the FAB. They had been working on the technique since 2015. At the same time, TSMC collaborated with the local Tainan government for three more water reclamation centers treating domestic sewage rende Yongkang, and another in my ancestral homeland of Anping. As of this riding between the three water plants, TSMC's Tainan Fabs have available to them daily supply of about 67,000 cubic meters of reclaimed water. In 2023, they built a reclaimed water plant in Hsinchu with the goal of providing 10,000 cubic meters of water each day. Starting in 2025, it accompanies a desalination plant that the government is building in the Hsinchu fishing harbor. The playbook is coming over to the United states. Once phases 2 and 3 at Fab 21 are completed, the whole facility will consume over 65,100 cubic meters of water. Even with the support of the Phoenix government, reclaimed water solutions are necessary. Thus, in September 2025, TSMC announced that they broke ground on the Industrial Reclamation Water plant on a 15 acre plot next to the Arizona Fab. The big challenge that TSMC is fighting is that semiconductor nodes use more water as they get more advanced. TSMC reports overall water consumption per mask layer for equivalent 12 inch wafers. Higher numbers indicate more process depths and water usage. The number has risen from 128.4 liters in 2020 to to 161 liters in 2024 with a major jump in 2023 as the 3nm node entered high volume production. The move to gate all around in the 2 nanometer class of nodes is particularly thirsty. The new transistor structure is very cool and a potential game changer for AI, but it also adds significantly more process steps to the recipe. Generally, I've heard that the N4 and N3 process nodes have something like 1,500 or so process steps in total. Applied Materials says that N2 sends that to over 2,000 steps, over 500 of which are for just the gate all around transistor. The more process steps, the more water used. Right now, TSMC is building three 2 nanometer class fabs in Hsinchu, Kaohsiung and Taichung. These fabs are estimated to double TSMC's current water demand. In other words, the water demand of just these three fabs alone is equal to every other fab. They run from 3nm on up and that is based on current build plans. So no Altman $7 trillion scenarios. More than that means more water infrastructure needs to be built and they have two plus year timelines. As we end, I want to note that I do not want to downplay the enormity of the water consumption. The challenges are indeed so immense right now. Pre N2TSMC in Taiwan uses as much water as 930,000 people or as much as the entirety of all the people in Pingdong county. And droughts will always be a part of life here. I do not think there is a way out of the water intensifying trends of more advanced semiconductor production. Better nodes will need more water and these are serious problems. But it does not mean that TSMC and the other semiconductor makers should just stop and not even try. Water is a problem that can be ameliorated with careful planning. And technology. The other things that Arizona has to offer plentiful land, a business friendly local government and a pipeline of talents are not so easily found and pumped out of an aquifer. And the wonderful thing about selling a product that is priced at tens of thousands of dollars with 60% gross margins is that you get money to play with. And with that money, all water related ameliorations are on the table. Alright everyone, that's it for tonight. Thanks for watching. Subscribe to the channel. Sign up for the Patreon. Sorry about my voice and I'll see you guys next time.