# Semiconductors and Water Chip fabs rinse wafers repeatedly with ultrapure water, so a large fab draws millions of gallons a day and cannot run if supply fails. Where fabs are built, and how much water they recycle, is now a siting decision alongside power and skills. Source page: https://www.materialinsights.org/links/semiconductors-and-water/ [Semiconductors](https://www.materialinsights.org/industries/semiconductors/) (industry) and [Water](https://www.materialinsights.org/commodities/water/) (commodity): 3 relationships. ## How they are linked ### 1. Ultrapure water *Physical flow · Strong · Water to semiconductors* Cleaning and etching steps leave residues that must be rinsed off with water far purer than drinking water, so fabs run their own purification plants; the site rates water 5 of 5 on criticality for contract foundries. - **5 of 5** criticality of water for contract foundries; 4 of 5 for integrated and memory makers - **up to 6.7 million gallons a day** water use of a large fab, industry estimate - **about 212 million litres a day** TSMC's reported water use, 2021 Buying the water is the small part of the bill: one industry estimate puts treatment and disposal at about 30 dollars for every dollar spent acquiring water, two-thirds of it on purification to ultrapure levels. Because purity, not just volume, is the requirement, a fab cannot simply switch to any local supply when its usual source is short. Enterprise types that depend on it: - Contract foundries: large daily volumes of ultra-pure water (criticality 5 of 5) - Integrated device makers and memory makers: ultra-pure water (criticality 4 of 5) Sources: [Material Insights](https://www.materialinsights.org/industries/semiconductors/materials/); [Robeco](https://www.robeco.com/en-uk/insights/2021/10/chipping-away-at-water-supplies); [WaterWorld](https://www.waterworld.com/municipal/environmental/article/16209089/wet-woes-for-the-semiconductor-industry) ### 2. Drought stops fabs *Shared risk · Strong · Water shortage constrains chip output* Fabs run continuously and cannot store weeks of water, so a drought in a fab cluster threatens output for customers worldwide. - **15%** cut in water supply to companies in two Taichung science parks, from April 2021 In 2021 the monsoon rains that normally refill Taiwan's reservoirs had failed; the government cut supply to science park users in Taichung and TSMC trucked water in from the wetter south. The cuts came during a global chip shortage, so a local water problem became a worldwide supply worry. Sources: [Fortune](https://fortune.com/2021/06/12/chip-shortage-taiwan-drought-tsmc-water-usage); [Bloomberg (via BNN Bloomberg)](https://www.bnnbloomberg.ca/taiwan-cuts-water-supply-for-chipmakers-as-drought-threatens-to-dry-up-reserves-1.1581507) ### 3. Allocation and reuse rules *Policy · Rising · Water policy shapes where and how fabs are built* Governments allocate scarce water between farms, cities and fabs, and approvals for new fabs increasingly depend on recycling commitments and dedicated supply. - **87%** share of manufacturing water TSMC recycled, 2019 - **about 65%** recycling at TSMC's first Phoenix fab, 2025; about 85% targeted once its reclamation plant opens in 2028 - **50 MLD** potable water treatment plant serving India's Dholera investment region TSMC's first Phoenix fab uses about 4.75 million gallons a day, and its three planned fabs are projected to need about 16.4 million, against roughly 4.2 million the city will supply, which is why the company is building a reclamation plant. Reuse lowers intake but not to zero, since cooling towers evaporate water. In India, the Dholera region, being developed as a semiconductor hub, has a 50 MLD potable plant and a separate recycled-water network for industry. Sources: [Fortune](https://fortune.com/2021/06/12/chip-shortage-taiwan-drought-tsmc-water-usage); [Axios Phoenix](https://www.axios.com/local/phoenix/2025/08/27/tsmc-industrial-water-reclamation-plant-phoenix); [Swarajya](https://swarajyamag.com/amp/story/tech/how-dholera-special-investment-region-is-positioning-itself-to-become-a-semiconductor-hub-interview-with-dr-kuldeep-arya-ias) ## For investors ### Key learnings 1. Water is a hard operating constraint for fabs: a supply cut cannot be bridged with inventory, so water stress in a fab cluster is a direct output risk. 2. Recycling rates of 65 to 90% are now designed into fabs, which shifts water risk from volume towards treatment cost and energy. 3. Leading-edge capacity sits in water-stressed places such as Taiwan and Arizona, so drought data belong in chip supply analysis. ### What to track - **Reservoir levels in Hsinchu, Taichung and Tainan**: Low levels before the monsoon raise the risk of supply cuts to fabs (Daily · Taiwan Water Resources Agency) - **Chipmakers' water withdrawal and recycling rates**: Rising recycling lowers exposure; rising withdrawal per wafer flags stress (Annual · company sustainability reports) - **Colorado River shortage declarations**: Deeper cuts tighten water supply in central Arizona, where new fabs are being built (Annual (August) · US Bureau of Reclamation) ## For policymakers ### Key learnings 1. A fab needs a reliable, dedicated water supply measured in millions of litres a day, which should be secured before incentives are approved. 2. Mandating high reuse and recycled-water networks, as in Dholera, lowers the conflict between fabs and farm and city users. 3. Taiwan's 2021 drought shows that even a priority industrial user can face cuts, so backup sources matter as much as headline capacity. ### What to track - **Water allocated to semiconductor parks and actual drawal**: Shows whether supply keeps pace as fabs ramp up (Annual · state industrial development corporations) - **Share of fab water from recycled sources**: Higher share reduces pressure on freshwater (Annual · company and park disclosures) ## India India's semiconductor push is still early, and water supply is being planned in alongside it: the Dholera investment region in Gujarat, pitched as a chip hub, runs a 50 MLD potable treatment plant and a separate recycled-water network for industry. ## Sources 1. [Semiconductors: materials](https://www.materialinsights.org/industries/semiconductors/materials/), Material Insights (2026) 2. [Chipping away at water supplies](https://www.robeco.com/en-uk/insights/2021/10/chipping-away-at-water-supplies), Robeco (2021) 3. [Chip shortage: Taiwan's drought and TSMC's water use](https://fortune.com/2021/06/12/chip-shortage-taiwan-drought-tsmc-water-usage), Fortune (2021) 4. [Wet woes for the semiconductor industry](https://www.waterworld.com/municipal/environmental/article/16209089/wet-woes-for-the-semiconductor-industry), WaterWorld 5. [Taiwan cuts water supply for chipmakers as drought threatens to dry up reserves](https://www.bnnbloomberg.ca/taiwan-cuts-water-supply-for-chipmakers-as-drought-threatens-to-dry-up-reserves-1.1581507), Bloomberg (via BNN Bloomberg) (2021) 6. [TSMC building water reclamation plant for Phoenix facilities](https://www.axios.com/local/phoenix/2025/08/27/tsmc-industrial-water-reclamation-plant-phoenix), Axios Phoenix (2025) 7. [How Dholera Special Investment Region is positioning itself to become a semiconductor hub](https://swarajyamag.com/amp/story/tech/how-dholera-special-investment-region-is-positioning-itself-to-become-a-semiconductor-hub-interview-with-dr-kuldeep-arya-ias), Swarajya (2024)