Chip Fab Plants need electricity 24 x 7. The electric grid needs chips. The Financial system needs both.

[ When Trucks stop running, civilization ends.  Trucks are not only vulnerable to running out of liquid fuels, they also depend on micro-chips (i.e. engine, emissions, etc), which can only be made if electricity is up  around the clock.

Alice Friedemann  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

The US Energy Department recently reported that “the nation’s aging electric grid cannot keep pace with innovations in the digital information and telecommunications network … Power outages and power quality disturbances cost the economy billions of dollars annually” (DOE).  Val Jensen, a vice president at ComEd, says the current grid is “relatively dumb…the power put into the grid at the plant flows according to the law of physics through all of the wires.”

But wait — that may be a good thing.  The less dependent the electric power system is on computers, micro-controllers and processors, and SCADA, the more resilient, easy to repair, and less vulnerable to cyber attacks the power system will be.  The electric grid is already complicated enough, with 9,200 generation plants, 300,000 miles of transmission lines, and dozens of squabbling entities running it.

The Smart Grid will dramatically increase the dependency of the electric grid on microprocessors, and turn the electric system into a giant computer that will monitor itself, optimize power delivery, remotely control and automate processes, and increase communications between control centers, transformers, switches, substations, homes, and businesses.

Smart Grid devices have the potential of making the electric grid less stable: “Many of these devices must function in harsh electromagnetic environments typical of utility, industrial, and commercial locations. Due to an increasing density of electromagnetic emitters (radiated and conducted, intentional and unintentional), the new equipment must have adequate immunity to function consistently and reliably, be resilient to major disturbances, and coexist with other equipment.” (NIST)

The electric grid is  vulnerable to disruptions from drought (especially hydroelectricity), hurricanes, floods, cyberattack, terrorism, and soon rising sea level and oil shocks (oil-fueled trains and barges deliver most coal to power plants). Making the electric grid even more dependent on microprocessors than it already is will make the grid more difficult and expensive to fix, and overly-dependent on microprocessor production — the most vulnerable industry of all.

Chip fabrication can stop for weeks after a short electric power disturbance or outage, potentially ruining an entire 30-hour batch of microprocessors and manufacturing equipment. High quality electricity must be available 24 hours a day, 7 days a week. Semiconductor chips are vulnerable to even tiny power disruptions because a single mistake anywhere in the dozens to hundreds of steps renders the product useless.

Chip fabrication plants can not handle rolling blackouts 

Electric service interruption is one of the major causes of semiconductor fab losses (Global). It can take a week or more for a fabrication plant to start up again (EPRI 2003).  There can be losses of millions of dollars an hour when a chip fabrication plant shuts down (Sheppard).

Chip fabrication & Financial system Interdependency

“The semiconductor industry is widely recognized as a key driver for economic growth in its role as a multiple lever and technology enabler for the whole electronics value chain. In other words, from a worldwide base semiconductor market of $213 billion in 2004, the industry enables the generation of some $1,200 billion in electronic systems business and $5 trillion in services, representing close to 10% of the world’s GDP” (wiki semiconductor industry).

Chip fabrication & Electric Grid Interdependency

Without microprocessors or electricity, infrastructure fails and civilization collapses. Just about everything that matters — financial systems, transportation, drinking water, sewage treatment, etc — is interdependent with both electricity and  microprocessors, which are found in just about every electronic device from toasters to computers.

Low Quality Electricity

The electric power system was designed to serve analog electric loads—those without microprocessors—and is largely unable to consistently provide the level of digital quality power required by digital manufacturing assembly lines and information systems, and, soon, even our home appliances. Achieving higher power quality places an additional burden on the power system.

Electricity disturbance causes:

  • Voltage sags can result from utility transmission line faults, or at a given business from motor start-ups, defective wiring, and short circuits, which reduce voltage until a protective device kicks in.
  • Transients happen due to utility capacitor bank switching or grounding problems at the energy user.
  • Harmonics and spikes often originate at end-user sites, from non-linear loads such as variable speed motor drives, arc furnaces, and fluorescent ballasts.

Any device with a microprocessor is vulnerable to the slightest disruption of electricity. Billions of microprocessors have been incorporated into industrial sensors, home appliances, and other devices. These digital devices are highly sensitive to even the slightest disruption (an outage of a small fraction of a single cycle can disrupt performance), as well as to variations in power quality due to transients, harmonics, and voltage surges and sags.

Voltage and frequency must be maintained within narrow limits

The generation and demand for electricity must be balanced over large regions to ensure that voltage and frequency are maintained within narrow limits (usually 59.98 to 60.02 Hz). If not enough generation is available, the frequency will decrease to a value less than 60 Hz; when there is too much generation, the frequency will increase to above 60 Hz. If voltage or frequency strays too far from this range, the resulting stress can damage power systems and users’ equipment, and may cause larger system outages.

Chip Fabrication plant shutdowns and consequences

Concern over the impact of utility power disturbances is probably the greatest in the semiconductor wafer fabrication industry. Producing complex computer chips is an extremely delicate process that blends microelectronics with chemical and mechanical systems, requiring tolerances in microns. The process can take 30 to 50 days to complete and can be totally ruined in a blink of an eye (Energy User News)

Power outages frequently cause damage to chips, which are fabricated on silicon wafers about the size of dinner plates that may take eight to 12 weeks to process. Wafers that are inside processing machines at the time of an outage are often ruined. In some cases, a shutdown of the air-purifying and conditioning system that keeps air in a chip factory free of dust also could contaminate chips.

Here are a few examples:

2007. Samsung, the world’s biggest maker of memory chips, shut down 6 of its chip production lines after a power cut at its Kiheung plant, near Seoul, costing the company $43.4 million. A problem at a switchboard at a transformer substation caused the power outage. Some analysts had said the outage could wipe out as much as a month’s worth of Samsung’s total production of NAND flash memory chips, which are widely used for data storage in portable electronics. Chips that were already in the fabrication process when the outage hit were discarded, and ramping back up to the previous production level could take some time (So-eui).

2010. A drop in voltage caused a .07-second power disruption at a Toshiba NAND memory chip plant in Japan which could raise prices on many devices, such as smartphones, tablet PCs and digital music players. NAND flash chips are fabricated on silicon wafers about the size of dinner plates and can take between 8 to 12 weeks to process. If the power goes out at any point in that time frame, the entire batch can be destroyed (Clark).

2011. The earthquake and tsunami in Japan took out nearly 70% of global semiconductor silicon wafers, the platform computer chips are built on (Dobosz). Production of microchips to control car electronic  operations  was  stopped at 10 Renesas factories where about 40% of these microprocessors are made, mainly due to power outages, not physical damage.  Renesas doesn’t expect to get back to pre-quake production levels for 4 months (SupplyChain Digital).

2011. The massive monsoon flooding of Thailand took out 25% of the world’s hard disk drives (Thailand is the world’s  #2 producer). One company, Western Digital, was out for 6 weeks and lost about $250 million dollars.

2011. Due to the Fukushima nuclear power plant disaster, Japan had to institute rolling outages, which shut down chip manufacturing.  Even a 3-hour outage can result in a stopped production line that can’t be restarted for a week or so. Analysts estimated this could cost $3.7 billion in losses (SIRIJ).

2013. DRAM supplies from Hynix’s fabrication plant in Wuxi, China, aren’t expected to return to normal until next year after a fire severely damaged that facility, according to a new report. In the meantime, DRAM prices are up 35% since the fire, as looming supply constraints prevail and there appears to be no rush by DRAM makers to sign new contracts, according to the report from analysts at investment bank PiperJaffray. The fire that blazed for almost two hours on September 4th, damaged equipment used for making PC DRAM, which sent memory prices skyrocketing. Hynix said it would make every effort to ramp up its Waxi-based fab operations to return to normal DRAM production by this November, a prediction Piper Jaffray contested (Mearian)

Emergency and Backup Power

A supply of fluctuation-free electricity is critical. Chip fabrication plants and server farms must balance the expense of building independent electricity resources with the cost of equipment failures and network crashes caused by unreliable power. Hewlett-Packard has estimated that a 15-minute outage at a chip fabrication plant cost the company $30 million, about half the plant’s power budget for a year.   Backup systems are so expensive, that a survey of 48 companies revealed only 3 had backup power sources: 3 used generators and the other one solar (Hordeski).

It’s too expensive to operate a separate power plant to generate power. Fab plants use up to 60 megawatts of power, so putting a natural gas or coal power plant onsite would cost somewhere between $100-400 million dollars.

Microprocessors and electricity are coupled

Microprocessors can’t be made if the electric grid is down. The electric grid can’t function without microprocessors — about 10% of total electrical demand America is controlled by microprocessors, and by 2020 this level is expected to reach 30% or more (EPRI).

Related Articles:


Clark, D. Dec 10, 2010. Power Blip Jolts Supply of Gadget Chips. Wall Street Journal.

Dobosz, J. 15 March 2011. Japan Outages Serve Up Semiconductor Bargains On A Platter. Forbes.

DOE. July 2003. Grid 2030. A National Vision for Electricity’s second 100 years. United Dtates Department of Energy.

EPRI (Electric Power Research Institute). 2003. Electricity Technology Roadmap: Meeting the Critical Challenges of the 21st Century: Summary and Synthesis. Palo Alto, Calif.: EPRI.

Energy User News Vol 26 #1. Jan 2001. Semiconductor Wafer Fab Plant Gets Premium Utility Power

Global, FM. 31 Oct 2003. Safeguarding the Semiconductor Fabrication Facility. Controlled Environments.

Hordeski, Michael F. 2005. Emergency and Backup Power Sources: Preparing for Blackouts and Brownouts. CRC press.

Mearian, L. 30 Sep 2013. DRAM prices up 35% since China fab plant fire.

(NIST) National Institute of Standards and Technology.  24 Jan 2014. Electromagnetic Compatibility of Smart Grid Devices and Systems. U.S. Department of Commerce.

Sheppard, J. Oct 14, 2003. Reducing Risk with Enterprise Energy Management: Observations After the Biggest Blackout in US History.

SIRIJ. April 6, 2011. Rolling power outages make chip fabrication impossible.

So-eui, R. Aug 4, 2007. Samsung chip lines fully working. Reuters.

SupplyChain Digital. 11 May 2011. Renesas to renew operations June 1.

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One Response to Chip Fab Plants need electricity 24 x 7. The electric grid needs chips. The Financial system needs both.

  1. Tripp Tucker says:

    Thank you. I just posted this on LinkedIn’s group Power Quality Network. Good job!