If the narrative about water scarcity mainly focuses about the impact of shortages on our daily lives and key industries (agriculture, beverages…), a new kind of consumers is also affected and will have to treat and reuse increasing amounts of water: semiconductor companies and, more globally, the data center industry.
Silicon wafers undergo multiple steps to build the transistors and circuit paths on the wafers, each step requiring high-purity chemicals and gases to create the layers and ultrapure water to rinse and clean. Ultrapure water then plays a critical role in preventing chips from getting contaminated, with each impurity potentially causing defects, impacting production yields and increasing manufacturing costs. It is estimated that a single semiconductor manufacturing facility uses up to 5 million gallons (19 million liters) of ultrapure water per day, which is about a thousand times purer than what we drink. And roughly 1,400 to 1,600 gallons of regular water are needed to produce 1,000 gallons of ultrapure water.
In regions like Taiwan and the Western US, which are home to giant semiconductor brands and foundries like TSMC or Intel and where droughts have become increasingly severe over the last few years, water scarcity poses a significant challenge to their operations, cost structures and growth aspirations. Furthermore, their water-intensive processes strain local communities and add pressure to global supply concerns.
To address these challenges, chip industry players are increasingly investing in water reduction and recycling strategies. Accordingly, advanced water treatment methods have emerged, enabling semiconductor manufacturers to recover and repurpose wastewater, selectively remove contaminants, and even extract valuable components from waste streams. Thus, tailored strategies, treating specific process wastewater for ultrapure water systems, offer a pathway to markedly reduce water consumption while securing the industry’s sustainability.
Hence, as the semiconductor sector gears up for expansion driven by technologies like Generative AI or electric vehicles, cutting-edge water and wastewater treatment systems for chip manufacturing processes are emerging, like Xylem-owned Evoqua’s extensive suite of technologies, which can now accommodate the diverse stages of an ultrapure water system. Such purification systems may rely a single technology, or a combination of multiple technologies to achieve optimal results, including : carbon filtration (to remove organic material), reverse osmosis (in which water is forced through a semi-permeable membrane in the opposite direction of the natural flow with enough force to exceed the osmotic pressure, rejecting dissolved solids), ion exchange (resins remove ionic impurities from water and are regenerated through a reversible chemical process), or ultraviolet light (contaminants such as bacteria and viruses are exposed to UV light, damaging their DNA and rendering them inactive).
These technological ways to address the water challenge in the semiconductor manufacturing industry find a compelling echo in the realm of data centers, where the energy used by processors creates massive heat, which can make servers slow down or malfunction. Efficient cooling in data centers has then become critical, and data center operators are increasingly embracing water-cooling towers (with techniques such as cold water evaporation) at the expense of air cooling, with the former allowing to reduce cooling energy costs and the environmental impact (assuming water is reused).
With AI catalyzing a shift towards power-hungry chips like Graphics Processing Units (GPUs) and Tensor Processing Units (TPUs), it will become increasingly difficult to maintain these “monster chips” at normal working temperatures (<80°C). This is why data center operators are now focusing on liquid cooling solutions which operate in two manners: 1/ direct liquid cooling (DLC), where a liquid flows through pipes on a cold plate directly attached to the chip and 2/ immersion cooling (ImC), where the whole electronic boards are fully immersed in a tank filled with a dielectric (non-conductive) liquid.
ImC, the newest technique, is obviously the most efficient (it captures 100% of the generated heat vs. 80% for DLC) but also the most complex as it necessitates specific data connection types, sealed servers or even the full redesign of the whole data center. Also, ImC pricing is, for now, prohibitive as it is still in its prototyping stages.
With a penetration of only 5% of total thermal management revenues, liquid cooling is far from “mainstream” amongst data center operators and then offers massive growth potential, with Dell’Oro expecting the data center cooling segment to grow at an annual rate of more than 45% over the next 5 years.
Overall, water cooling and treatment in the semiconductor and cloud industries represent a massive opportunity for a large and diverse array of players, from data center cooling specialists (Vertiv, Asia Vital, TaiSol Electronics…) to water technology specialists, such as Xylem Evoqua.
As water processes become increasingly complex, another opportunity is emerging for technology providers: water-as-a-service, in which the provider takes responsibility for operation and maintenance of the on-site water treatment system, and which allows business models to shift from equipment sales to highly recurring revenues.
