It's not easy to say "not in my backyard" to one of the world's most valuable factories. But some residents of Taichung, Taiwan's second largest city, gave it a try. Taiwan Semiconductor Manufacturing Co. already has two factories here and last year proposed building a third factory where it would mass-produce its smallest chips yet. But some balk at the prospect, aware of the environmental burden a third plant would impose on Taichung: It would require the equivalent of a quarter of the industrial city's electricity and 6 percent of its water, according to local officials.
“We are very worried about sacrificing water and electricity for industrial development,” said Li Zhengwei, director of the Taichung City Urban Development Bureau, on a recent smoggy afternoon.
After months of delays, Taichung City gave the green light to the plant in August. But it has sparked an ongoing debate over how Taiwan's economic growth and national security considerations mesh with environmental concerns. Officials, activists and residents are wondering how the city can sustain another plant.
TSMC produces about 90% of the world's advanced chips, powering everything from iPhones to artificial intelligence, electric vehicles and fighter jets, and is at the heart of Taiwan's economy. It is also a core part of its national security strategy: Taiwan-made chips are vital to global supply chains, including those of Chinese companies.
The United States also has a keen interest in Taiwan maintaining its dominance of global chip supplies, as it has moved to cut off China's access to advanced computer chips.
Cities around the world are trying to lure TSMC to build next-generation factories on their shores, partly to create jobs but also to diversify global chip supplies amid a conflict between China and Taiwan, which Beijing says is part of its territory. But their consumption of water and energy resources has sparked controversy in places like Phoenix.
Outside Taiwan, the company has agreed to build factories in Germany, Japan, China and the United States, but they won't produce the most cutting-edge chips. National security concerns in Taiwan make it even more important for TSMC to produce these products only in Taiwan.
"It represents an important industry that needs to be protected in Taiwan, which will make other countries willing to step in, which is why this industry must stay here and must not let its core technology leak out," Li said.
With no other company able to match TSMC's dominance of global chip supplies, officials and environmental groups have questioned how long Taiwan's resources can continue to meet the technology industry's growing demand.
In Taichung, local activists know the factory will win in the end and that their environmental concerns will not hinder TSMC's continued growth.
"The government's policy is... to give them everything they want, including land and electricity. This is unsustainable," said Kelly Zhao, a researcher at the local nonprofit Taiwan Air Cleaning Corporation. "We love TSMC, but this is not the right kind of love."
Lee said the national utility company assured Taichung City that the next plant would not affect the city's future water and power supplies. TSMC’s public relations department said in an email that the company had no information to share about the future factory in Taichung.
But coupled with TSMC, which has 15 factories in Taiwan, committing to switching to renewable energy by 2040, Lee doesn't see how Taiwan can sustain growth. "If you look at Taiwan's future energy policy, this plan is mission impossible."
Taiwan already faces resource constraints. In 2021, water shortages prompted Taiwan to cut off irrigation to thousands of acres of farmland, and the power grid has suffered multiple severe blackouts in recent years.
TSMC consumed more than 22,000 gigawatt hours of electricity last year, equivalent to about half of Taiwan’s total household electricity consumption. Ten percent of the electricity comes from renewable energy sources.
The company said that more than 90% of the water it uses is recycled and that by 2022, it will save more than 3 million tons of water. But that's just a fraction of the 105 million tons of water the company said it used at its Taiwanese factories last year. Much of this comes from local reservoirs.
When asked about these concerns, TSMC's public relations department said the company takes water management very seriously, pointing to a water recycling project completed last year in southern Taiwan.
"TSMC aims to increase the supply of recycled water to gradually reduce annual urban water consumption," the department said.
The company announced last month that all of its energy will come from renewable sources by 2040, pushing forward its previous commitment to that goal by a full decade.
More broadly, Taiwanese authorities have pledged that the island will become carbon neutral by 2050 and will completely phase out the use of nuclear power within the next two years, increasing demand for renewable energy.
To achieve this goal, Taiwan Electric Power Company has built acres of solar panel fields and wind farms on flat reclaimed land in eastern Taichung, where the sun scorches and winds blow across the Taiwan Strait. As of August, 11 gigawatts of solar had been installed, and the government plans to install 30 gigawatts by the end of the decade — still a fraction of TSMC's usage.
Officials have warned that Taiwan will not be able to meet its near-term renewable energy targets - not because enough capacity is not installed, but because of the increasing amount of energy Taiwanese industry needs.
Because of TSMC's perceived importance to Taiwan's homeland security, some activists said they were refraining from the strongest criticism.
“People are hesitant to oppose (the newest plant),” said Boren Hsu, a researcher at the local nonprofit Environmental Rights Foundation. "Now, if you rebuke TSMC, you immediately face a lot of pressure."
Construction of TSMC's two newest fabs elsewhere in mainland China is underway, and there are already discussions about next-generation fabs. But questions remain about how Taiwan can sustain these momentum.
"Can our society and environment afford them?" asked Yang Guozheng, an ecology professor at Taichung Jingyi University. "Can we survive this?