Chip suppliers warn on EU plan to bar ‘forever chemicals’

Chip suppliers have warned that a European effort to impose a ban on “forever chemicals” will cause widespread disruption to already tight semiconductor supply chains.

Five European countries, including Germany and the Netherlands, on Tuesday proposed that the EU phase out tens of thousands of so-called forever chemicals, known as PFAS, used in the production of semiconductors, batteries, aircraft, cars, medical equipment and even frying pans and ski wax.

The ban would constitute “the broadest restriction proposal in history”, Frauke Averbeck, who led the proposal for the German Environment Agency, said. “It’s a huge step for us to take.”

“If no action is taken we estimate that the societal costs will exceed the costs without a restriction,” said Richard Luit, senior policy adviser at the Dutch National Institute for Public Health and Environment.

However, industry executives warned that a broad ban could have severe consequences for many sectors. Chemours, a leading supplier of high-end fluoropolymers, warned that the chemicals were “absolutely critical” for semiconductor manufacturing as well as a wide range of other industries.

“If we do not have these, there would be very severe global disruption,” said Denise Dignam, Chemours’ head of advanced performance materials. “I can’t think of how you would run these [semiconductor] manufacturing processes without these materials.” 

Iwaki, the world’s leading chemical-handling pumpmaker, said that restrictions at a European level could lead to “more disruptions and likely an increase in prices” because of scarcity of supplies and higher costs.

In addition to Germany and the Netherlands, the effort to eliminate PFAS from Europe has been backed by Denmark, Sweden and Norway, and comes after three years of discussions with policymakers and industry on a ban. The proposal offers two scenarios: a full ban or a ban with specific exemptions based on the availability of alternatives.

If approved, the regulation would not come into force until 2026 at the earliest. Some sectors, such as components for medical equipment, will be permitted a transition period of up to 12 years while others will have to adjust within 18 months.

PFAS are extensively used across industry and in consumer products because of their resistance to high temperatures and corrosion. In many cases there are no manufacturing alternatives. Their “forever chemicals” moniker stems from the fact that their carbon-fluorine bonds are among the strongest in organic chemistry, which means that they do not break down easily and accumulate over time in humans and in the environment. Several have been linked with impairments to unborn babies and damage to human internal organs as well as contaminating water and wildlife.

Public awareness and campaigning against the chemicals accelerated after the release in 2019 of the film Dark Waters, which detailed a case against the US company Dupont for dumping PFAS in waterways in West Virginia.

Solvay, the Belgium-based chemicals group which also produces fluorochemicals, said it would review the scope of the European proposal. It would analyse “the possible implications on our products and businesses”.

The group has already announced the phasing out of fluorosurfactants, “the PFAS substances currently under the most intense spotlight,” Solvay said.

The proposals published on Tuesday forecast that the use of PFAS will rise by 10 per cent a year for the electronics industry, mainly driven by soaring demand for chips. The report estimates that in 2020 up to 310,000 tonnes of PFAS were introduced to the market. Over 30 years, “the expected mean tonnage in the European Economic Area is 49mn tonnes,” the report stated.

Some of the most critical PFAS are already in short supply as chipmakers expand capacity. The price of one of the most critical PFAS derivatives used in chipmaking — PFA fluoropolymer — has already soared by 70-80 per cent in the past two years, because of shortages caused by high demand, according to semiconductor industry executives. Despite a chip downturn, prices are still expected to jump a further 20 per cent this year, they said.

Parts of the semiconductor industry and its supply chain are being considered for a transition period of up to 12 years if a ban is introduced, subject to further information from the industry.

Chemours’ Dignam warned that regulators must consider the whole supply chain when considering a ban because chips are crucial to everything from cars to mobile phones.

“Trying to regulate a class of chemistry is like trying to regulate [everything from] diesel gas to the olive oil that you put on your salad,” Dignam said. “It is maybe a dangerous precedent to go that broad.”