Malaysia’s semiconductor sector is heading into a period of rapid growth, with its share of the global market expected to double from 7 to 14 per cent by 2029. With that comes an equally rapid escalation in energy use and Scope 2 emissions – unless manufacturers overhaul how they source and consume electricity, said experts at the Semiconductor Sustainability Summit 2025 in Penang last month.
They also stressed that reducing purchased-electricity emissions, known as Scope 2, must become a top priority as countries race to expand chip production capacity.
Already the world’s sixth-largest chip exporter, Malaysia faces mounting pressures as global demand accelerates, driving up both electricity use and Scope 2 emissions.
The International Energy Agency estimates the semiconductor industry consumed 149 terawatt-hours (TWh) of electricity in 2021 – roughly Malaysia’s entire annual use. As of 2023, purchased-electricity emissions still made up 77 per cent of the sector’s carbon footprint, or 37 million tonnes of carbon dioxide equivalent.
“The semiconductor industry is one of the most capital- and energy-intensive industries in the world,” said Yub Shin, partner at management consulting firm, Arthur D. Little, speaking at the Semiconductor Sustainability Summit 2025 organised by Grundfos, a Danish company that specialises in advanced pump and water-management solutions.
“The global semiconductor market’s growth is currently driven by artificial intelligence (AI), cloud computing and the Internet of Things (IoT). So, it’s important to understand how chip production and technology advancements, along with fab locations, relate to sustainability challenges,” he added, noting that current projections estimate sales to exceed US$1 trillion by 2030 and based on recent industry conversations, these numbers could go even higher.
Shin warned that as fabs consume more electricity, mostly from external grids, Scope 2 emissions increase proportionally, making them the largest contributor to total greenhouse gas emissions for fab operators.
This mainly comes from purchased electricity used to power critical facilities like cleanrooms, heating, ventilation, and air conditioning (HVAC) systems and other high precision equipment.
The rapid growth not only reshapes the entire value chain, from chip design to fabrication and assembly, it drives massive capital investments into new fabrication facilities and puts pressure on the industry to adopt greener manufacturing practices.
Between 2019 and 2023, combined energy use among major industry players such as Samsung Electronics, SK Hynix, Micron, TSMC and Intel rose from 83 TWh to 113 TWh, according to Shin. This is an annual increase of 8 to 9 per cent. TSMC alone is expected to consume about one quarter of Taiwan’s electricity by 2030.
Thus, reducing energy consumption and lowering emission factors are the two primary levers for cutting Scope 2 emissions among fab operators.
While renewable-energy procurement options vary significantly across markets, Shin emphasised that reducing electricity consumption remains the “most immediate and controllable lever” for fabs, particularly in countries like Malaysia, where the grid remains heavily fossil-fuel dependent and offers limited options for purchasing clean energy.
Here, water systems optimisation provides a great opportunity to reduce electricity demand and emissions, as they are among the most energy-intensive components of chip manufacturing, he noted.
“Water systems account for up to 30 per cent of fab energy consumption. Within these systems, pumps alone can contribute up to 15 per cent of total fab energy use,” he said, adding that water pumps are a critical enabler to improve operational efficiency.
From left: Pravinganesha Rajoo, deputy director of the sustainability division at the Malaysian Investment Development Authority (MIDA); Yub Shin, partner at Arthur D. Little South Korea; and Therese Noorlander, director of industry sustainability at Grundfos, during a panel discussion at the Semiconductor Sustainability Summit 2025. Image: Grundfos
Optimising water systems to cut energy use and emissions
In semiconductor manufacturing, water is indispensable. Ultra-pure water (UPW) that has been purified to remove contaminants is needed at nearly every stage of chip fabrication, from wafer cleaning to chemical dilution, cooling, rinsing, and air-handling systems.
A single fab can consume about 38 million litres of UPW per day, making water management not just a sustainability concern but a core operational necessity.
Therese Noorlander, director of industry sustainability at Grundfos, said that globally water resources are already stressed and in regions like Southeast Asia, the risk is higher than in other parts of the world.
“Semicon is very water-intensive, and natural resources around the world are already strained. We know there will be less water available due to increasing demand and regulation. Industries, communities and megacities are all fighting for the same limited resources,” she said.
Given semiconductor manufacturing’s high water dependence, optimising water use has become a crucial step forward.
Globally, only 1 per cent of freshwater is accessible for human use. This limited supply means that growing industries such as semiconductors are competing with households, agriculture and cities for the same small pool of usable water.
“I don’t know who can tell me how we can create food without water, medication without water, chips without water. We’re fighting for that same 1 per cent [of freshwater], which puts a huge pressure on industries to work responsibly,” Noorlander cautioned.
She emphasised that with semiconductor water use expected to rise significantly each year, manufacturers in Asia must rethink how water is used, reused and circulated across fab facilities.
“If your company decides not to take action, the cost of inaction will be massive. Even if you don’t care about sustainability, if you only care about business or the economy, water is a must-do element,” she warned.
Noorlander said as a global water solutions provider, Grundfos sees water systems as one of the most impactful, and currently underutilised levers for reducing energy consumption in semiconductor facilities.
“The semiconductor industry has the power and responsibility to transform its energy agenda. Up to 60 per cent less energy consumed can be achieved by optimising pumps in cooling systems. Water usage can see similar reductions,” she added.
In many facilities, a simple optimisation – such as implementing variable speed control for pumps – can cut energy and carbon emissions by 50 per cent via a 20 per cent reduction in pump speed.
Within the water-energy nexus, the greatest opportunities lie in HVAC and chilled-water systems. A mere 2°C temperature change can save 21.9 gigawatt hours of electricity per year, €3.29 million (US$3.8 million) in annual costs, and avoid over 5,000 tonnes of carbon emissions.
As Malaysia positions itself for the next chapter of semiconductor growth, Noorlander stressed that expansion must not deepen energy and water vulnerabilities.
“Consumers may not yet be asking about water and energy consumption, but investors along the value chain will, and companies that fail to act will face increasing scrutiny,” she said.
Optimising facilities and equipment for energy and water efficiency will be essential to strengthening Malaysia’s competitiveness, she added, warning that the opportunity must be seized before foreign investment and long-term deals flow to countries with stronger sustainability commitments.
“We want the semiconductor industry to move from resource-intensive to resource-smart. What we don’t want is for the industry to be seen as irresponsible, just growing because digital transformation demands more chips,” Noorlander said.
“This industry has the opportunity to turn growth, innovation and sustainability into a showcase for how water, energy and technology can come together.”
