Sustainability series: sustainable computing with Kathleen Fiehrer of Intel

Anurag Dey:

Welcome to the Analysys Mason podcast. My name is Anurag Dey, and I'm a Manager in sustainability here at Analysys Mason. During this series of podcasts, we'll be joined by business leaders from around the TMT landscape to hear their insights on sustainability, ESG and what it means to them, their organisations and the wider industry.

Today, I'm delighted to be joined by Kathleen Fiehrer, a Sustainability Technologist within the Client Computing group at Intel and Stela Bokun, a Partner at Analysys Mason who specialises in strategic projects with hyperscalers, tech vendors and telecoms operators.

Intel is a name many people will be familiar with. It is one of the world's largest semiconductor chip manufacturers, which, for the last 50 years, has enabled its customers to capitalise on the power of digital technology. Intel is really at the forefront of developing new semiconductor technologies, so we are thrilled that Kathleen is here today to tell us about their sustainability journey.

Stela Bokun:

Thanks for the introduction, Anurag. My colleagues and I have collaborated with Intel on numerous strategy projects so far, and including some on sustainability strategy, too. I'm particularly pleased that Kathleen could join us today. Thanks Kathleen, and I'm really looking forward to our discussion.

Kathleen Fiehrer:

Me too. Thank you for the opportunity.

State of the semiconductor industry and net-zero goals

Stela Bokun:

Great. Should we press on? First of all, before everything else, I would really like to hear your more general view. Is the semiconductor industry genuinely on the path to net-zero? Also in that context, what are some of the key roadblocks that will have to be overcome in the near-to-medium term?

Kathleen Fiehrer:

A lot of our partners have taken goals to become net-zero, and of course that's great, but getting there is very difficult. We do manufacture a physical product, so I'm not going to say there has to be, but there is associated carbon when you actually manufacture something. Together, our goal holistically is to strive toward net-zero, but of course we need to work with the entire ecosystem. This is all the way back to the supply chain, to manufacturers or to the supply chain vendors such as Intel because we are one component of the overall supply chain, all the way through the final manufacturer and integrators. Together, we can achieve getting towards net-zero, but it is a difficult path. Some of the things that we can work on, of course, are using 100% renewable electricity and reusing minerals and materials such as plastics in our products, which helps to decrease the overall carbon footprint of our systems. But without collaborating throughout the value chain and supply chain, it will be difficult to achieve net-zero.

Without collaborating throughout the value chain and supply chain, it will be difficult to achieve net-zero. – Kathleen Fiehrer

Stela Bokun:

Makes sense. It must be really difficult to commit to targets and to goals when there is only so much you can control. You talked about the entirety of the ecosystem and the value chain, but thinking again, going back to this question about the ecosystem and the value chain, how would you think that ESG and sustainability requirements have changed your business to date, and also the businesses of some of the other companies in the value chain, some of which are your direct partners?

Kathleen Fiehrer:

That's a really good question, and I would say there's more pressure on the entire supply chain and the ecosystem. We have investors who are demanding sustainability, which is a major motivation. Larry Fink, 2 years ago, he's the CEO of BlackRock and controls USD7 trillion in assets or more at this point, has stated that sustainability is a top issue for investors due to the increasing risks from climate change. You can think of the impacts to supply chain and manufacturing from hurricanes and other weather events that have been precipitated by climate change. Limiting our carbon footprint goes a long ways toward mitigating climate change. In addition, there are global regulations that are addressing climate change specifically, and that if you don't meet those regulations that I'm thinking of energy efficiency requirements, there's the California Energy Commission, there's ERP lot three, there's Japan's top runner that if your product doesn't meet those regulations, then you cannot sell into those markets. There's simply a barrier to entry, which can impact your margins and your business viability.

In addition, companies and countries are taking net-zero goals and they're expecting when they submit RFQs or requests for quotes from prospective purchases, that those systems that they purchase will align with their reduction targets. A lot of the pressure on the industry reducing our climate or our emissions comes from external factors such as country net-zero targets, company net-zero targets, investor requirements and regulations. But I wanted to point out that even though there is this external pressure to achieve net-zero or reduce the overall emissions from our products, there is value and companies can have significant earnings from having sustainable products, and it can be good for business.

Companies can have significant earnings from having sustainable products, and it can be good for business. – Kathleen Fiehrer

Intel's sustainability initiatives

Stela Bokun:

That's really fascinating. In a way, it's really all the talk about sustainability is not only about buzzwords, it genuinely has commercial impact on these large businesses such as Intel. Now, if we zoom into Intel's own business, it would be really good if you could tell us a little bit about some of the key initiatives and the sustainable practices. But here I'm not only interested in understanding the list of initiatives. I would really like to zoom into how do you know whether you are indeed successful in meeting some of these goals. Because there are so many different ways of measuring success and different processes and different KPIs that different companies publish.

Kathleen Fiehrer:

That's a very good question, and we have a motto at Intel, and I'm sure a lot in the industry do, is you can't make progress without understanding where you're starting from or where your baseline is. We measure what matters. With this in mind, Intel has really become involved in drafting standards across within our industry. One area that we're really partnering with the industry is on PAIA, which is a product attribute to impact algorithm, which aims to streamline product carbon footprint methodologies and calculations. Now, about a year ago, PAIA launched a revision effort. We like to call it PAIA 2.0. That's not the real term for the revisions, but they formed these work groups to address the carbon footprint of each of the different components within an overall system. They have an IC work group, which Intel is leading, there's a PWB or printed wire board work group, SSD work group, chassis work group, display work group, et cetera. Finally, a product user that the emissions associated with using a product.

Well, each work group will have a final calculation methodology such that a final manufacturer can build up their overall carbon footprint of a product by inputting what their contributions are from, or their requirements... Not requirements, but their inputs are for an IC, for a printed wire board, for their SSD, such that you can get an overall carbon footprint for your system. This is one example of where we are working to help drive metrics and standards.

But in terms of other areas that Intel is working in, I mentioned earlier that we do have goals around our renewable electricity purchases by the end of 2030. We have goals to achieve net-zero for our Scope 1 and Scope 2 emissions by the end of 2040, and then the entire supply chain by the end of 2050. When we establish these roadmaps and goals, sometimes we have a vision or a roadmap of how we're going to get there. In the case of the supply chain, we're not sure how we're going to get there, but we do plan on working with the supply chain in order to achieve that net-zero.

Stela Bokun:

Great. It's really great to hear about all of these initiatives and obviously in Analysys Mason, we follow this closely. What I did want to ask you is whether there is anything that you find particularly challenging, maybe with achieving your targets, maybe with setting goals, maybe with some specific initiatives. What's particularly challenging on your path towards creating a greener Intel?

Kathleen Fiehrer:

Well, I would say the biggest hurdle will be the supply chain, because of course we can control what's inside our company by moving, for Scope 1 emissions, putting in better abatement for manufacturing to make sure our emissions are as low as possible. Similarly, with Scope 2 by purchasing renewable electricity. But when it comes to Scope 3, our supply chain emissions, those are the largest within the overall manufacturing of cradle to gate. Working with the supply chain will be the most difficult. But as part of this, Intel has joined Catalyze, which is a programme launched by Siemens where those companies interested in purchasing renewable electricity can band together for more market access and use their volume in order to drive renewable electricity installations within their area such that they can move to renewable electricity. This is one example of where Intel is helping the supply chain move to more sustainability and renewable electricity. Without market pressure to drive the infrastructure, it would be more difficult to achieve net-zero within the supply chain.

Segment-specific sustainability in the PC market

Stela Bokun:

Great. Good to hear that. I'm sure there will be a lot more challenges along the way, but as long as you're ready to face them and your partners are ready to face them, I am optimistic. Now, let's switch gears. I know your expertise is specifically related to the PC market. What is different about this segment of the market? Are there any particular challenges or opportunities to be greener in the PC business and the related value chain?

Kathleen Fiehrer:

That's a very good question. When we look at our products versus other products within IT, I'm thinking of servers, so the PC versus the server. When you look at where the carbon footprint largely comes from for a server over the product lifecycle, majority of the carbon footprint comes from its use phase, so the energy used in a data centre, so moving an entire data centre to renewable electricity will go a long ways toward reducing the overall carbon footprint for servers. Whereas when you look at the carbon footprint of a notebook, 80% of the carbon footprint comes from its manufacturing. Before you even open the box, most of the carbon is embedded in that device. Those systems are already very energy efficient, so there's not a lot of energy or emissions associated with their use relative to the manufacturing carbon footprint. At Intel, we have put a lot of effort into reducing the overall carbon footprint of manufacturing the system.

You may say, "Well, Intel is an IC manufacturer, they're just a component manufacturer within the overall system." We do have these reference designs that our customers can adopt, either the whole system or separate components that we've designed to obviously be performant, but also we've taken as a priority reducing the overall carbon footprint of these reference designs. In fact, 2 years ago when we announced our goal to drive to Scope 1 and 2 net-zero by the end of 2040, we also took a goal to have these reference designs reduce their overall system carbon footprint by 30% by 2030. As part of this effort, we're, of course, working on improving energy efficiency of these systems, but also developing technologies that reduce the overall carbon footprint during manufacturing, which of course as I stated earlier, is the majority of the carbon footprint for an overall system.

Some of these technologies that we're adopting, we have modular architecture, which as you can imagine the printed circuit board are in squares and rectangles as opposed to these fancy cutouts that are on older systems that were used to cut out where the fans would go. You can imagine as you're doing those cut-outs, a lot of the printed circuit board would be thrown away. Now, if you're using architecture where you have squares and rectangles for your printed circuit board, you're throwing away less of... There's less waste generated, and therefore you're reducing the overall carbon footprint of your system. You may say, "Well, then you have to have..." You would have a separate IO cards for the IO, but you would connect those with high-speed connections such that the main board is connected to the daughter cards. Not only does that reduce the overall carbon footprint of the board, it also makes it more repairable such that if you can imagine... the motherboard is one of the components more likely to fail. Because when you're plugging in your power cords or your USBs, I don't know if you're like me, but you're not always pulling them out straight or plugging them in straight, you can wiggle it around and it can cause eventual damage over time. Rather than when that port eventually fails, rather than having to replace the entire motherboard, you can just replace that daughter card. Not only it extends the life of the system as well as reduces overall carbon footprint since as I mentioned earlier, you're not wasting so much material during the circuit board manufacturing.

Stela Bokun:

Repairability is really important in the context of PC market, right?

Kathleen Fiehrer:

Yes, and of course there is pressure. Different markets have pressure to improve repairability. That's another great factor for sustainability.

Stela Bokun:

Great. Thank you so much, Kathleen. I really enjoyed hearing your views and I'm sure our audience will appreciate them, too. At the very end of our conversation, do you have any final message to the industry as a whole?

Kathleen Fiehrer:

I would say we're all in this together. We can't work independently. We do have to work together. We have an integrated supply chain. We need to bring that supply chain into prioritising reducing the overall emissions in our carbon footprint all the way through manufacturing. To summarise, we need to continue to work together because we have this common supply chain and manufacturing footprint. My final message is we're all in this together, let's continue to work together to solve these complex problems.

Stela Bokun:

Fantastic. It's been great talking to you and learning more about the state of affairs in the semiconductor industry. In many ways, semiconductors are enabling sustainable development all around the world, so it's really important that their production process becomes greener too. Otherwise, all the positive impacts may be cancelled out. As I said earlier in our conversation, I really feel optimistic from everything I've heard from you today. Thank you so much and thanks everyone for listening, too. Over to you, Anurag.

Anurag Dey:

Thank you so much, Kathleen and Stela. I'm sure that your conversation is going to be of great interest to our listeners. That's it for this podcast. If you'd like to automatically receive future episodes, do subscribe to the Analysys Mason podcast. We welcome your comments, feedback and reviews. Thank you for listening.