Semiconductor Production Pollution (SEMICON)

          CASE NUMBER:         123 

          CASE MNEMONIC:      SEMICON

          CASE NAME:          Semiconductor Pollution



I.        IDENTIFICATION

1.        The Issue

     As developments in new technology continue to drive a

variety of sectors, high-technology manufacturing continues to represent

both a vital market for trade and a serious threat for the

environment.  Producers of semiconductors have increasingly come

into conflict with local activist groups and various regulatory

bodies on the subject of environmentally safe, high technology

manufacturing processes.  These high-tech manufacturing processes

pose a serious threat to many aspects of the local environment,

as shown in the Fairchild Semiconductor case and the pollution of

the local environment.

2.        Description

     In 1975, Fairchild Semiconductor built a chip manufacturing

factory in Los Paseos, a suburb in Silicon Valley.  Similar to

most chip manufacturing factories, hazardous materials used in

production included, "acids, cyanide compounds, organic solvents,

silicon tetrachloride...[and] arsine gas."  Large amounts of

these kinds of liquid waste were created with disastrous consequences. 

In 1982, news of Fairchild's environmental negligence hit the

media.  A drinking water well located 2000 feet from a Fairchild

underground chemical storage tank was found to be contaminated by

carcinogens like trichloroethane and dichloroehtylene.  Local

officials immediately shut down the well. Local citizens' groups

were quick to connect Fairchild's environmental pollution with

alarmingly high rates of miscarriage, cancer, and birth defects. 

Since 1982, Fairchild closed its chip manufacturing plant and has

spent at least $15 million attempting to clean up the aquifer.

     The Bay Area Regional Water Quality Control Board instituted

a broad testing program and found many manufacturers of

semiconductors to be responsible for leaking hazardous wastes

intothe aquifer.  The Environmental Protection Agency placed nineteen

different high-tech sites on their Superfund list (see SFUND case).
Nine public and sixty private wells were shut down.  Only a 200

foot layer of clay, separating Silicon Valley's aquifer from its

polluted ground water, prevented a major environmental disaster.

     The trade implications of this case for the microchip

industry are difficult to ascertain.  At the time, U.S. chip producers

werellocked in combat with their Japanese counterparts. Experts

foresaw that, by 1985, U.S. advantage in computer and chip trade was

about to disappear for the first time in history. U.S. chip

manufacturers had already begun to move production and assembly operations

offshore, trying to mitigate the high cost of labor in Silicon

Valley and the rising value of the dollar.  In fact, the U.S.

semiconductor industry's deficit with Japan tripled in 1984 to $2

billion.  Clearly, more stringent environmental regulations in

theBBay Area, not to mention more severe penalties for ignoring such

regulations, played a role in chip manufacturers' push to export

their very manufacturing processes. For many high-tech companies

in the Silicon Valley, the Fairchild incident was a loud signal that

the cost of doing business in the Bay Area had just risen

dramatically.

3.        Related Cases

     Keyword Clusters

     (1): Trade Product            = TECHnology

     (2): Bio-geography            = TEMPerate

     (3): Environmental Problem    = WATER

4.        Draft Author: Joshua Rosen 

B.        LEGAL Cluster

5.        Discourse and Status: DISagreement and COMPlete

     In contravening local and federal regulations on waste

treatment and disposal, as well as water quality, Fairchild

Semiconductor was required to assume the cost of clean-up and to

comply with more stringent new regulations on waste storage.

6.        Forum and Scope:  USA and UNILATeral

7.        Decision Breadth: 1 (USA)

8.        Legal Standing:  SUBLAW

C.        GEOGRAPHIC Clusters

9.        Geographic Locations

     a. Geographic Domain:    North America [NAMER]

     b. Geographic Site:      Western North America [WNAMER]

     c. Geographic Impact:    USA

10.       Sub-national Factors:  Yes

     This case was subject to a variety of both California and

federal water quality and waste disposal regulations.

11.       Type of Habitat: DRY

D.        TRADE Cluster

12.       Type of Measure: ADMINinstrative

     Fairchild Semiconductor was required to assume the cost of

clean-up and to comply with more stringent new regulations on

waste

storage.

13.       Direct vs. Indirect Impacts: INDirect

14.       Relation of Measure to Environmental Impact

     a.   Directly related:   YES SEMIconductor chips

     b.   Indirectly related: NO

     c.   Not related:        NO

     d.   Process related:    Yes WATER

15.       Trade Product Identification: Semiconductor

16.       Economic Data

     The U.S. computer industry output is $17.7 billion.

17.       Impact of Measure on Trade Competitiveness: LOW

     It seems that increasingly strict enforcement of existing

regulations only hastened a continuing trend of declining

production of semiconductors in the United States.  Therefore,

trade competitiveness was only slightly effected.

18.       Industry Sector: Semiconductors (SIC Code #3674)

19.       Exporters and Importers: USA and MANY

E.        ENVIRONMENTAL Clusters

20.       Environmental Problem Type:  WATER

     Pollution of drinking water occurred as a result of

contamination by inadequate liquid waste disposal, including

acids,

cyanide compounds, organic solvents, silicon tetrachloride, and

arsine gas.  General habitat problems, resulting from pollution

of

ground water, are bound to occur, effecting all species.

21.       Name, Type, and Diversity of Species 

     Name:          Many (including 367 species of mammals)

     Type:          Many

     Diversity:     19.973 higher plants per 10,000 km/sq (USA)

22.       Impact and Effect: HIGH and REGULatory

23.       Urgency and Lifetime:  MEDIUM and 100s of years

     High rates of birth defects, miscarriage, and cancer create

a

moderate urgency to resolve these kinds of problems.  Production

of

264,000 thousand metric tons of hazardous waste a year by all

industry indicates the severity of such problems.

24.       Substitutes: SYNTHetic

     Semiconductor manufacturers have been assiduously searching

for cleaner alternatives to present microchip production

processes.

F.        OTHER Factors

25.       Culture: NO

26.            Trans-boundary Issues: NO 

27.       Rights: NO

28.       Relevant Literature

Ayres, Judith, "Controlling the Dangers of High-Tech

     Pollution," EPA Journal 10,  December, 1984, 14-15.

"Electronic Components and Equipment and Superconductors,"

     U.S. Industrial Outlook.  Government Printing Office:

     Washington DC, 1994.

"Electronics," Industry Surveys.  Standard and Poor's: New

     York, 1983.

"Electronics," Industry Surveys.  Standard and Poor's: New

     York, 1994.

French, Hillary F., "Costly Tradeoffs: Reconciling Trade and

     the Environment."  Worldwatch: Washington DC, March,

     1993).

Miller, Michael W., "Findings of Toxin Leakage in Silicon

     Valley Hurt Chip Makers' Reputation for Safety," Wall

Street Journal.  August 29, 1984: 25.

Seigel, Lenny and John Markoff, The High Cost of High Tech:

     The Dark Side of the Chip.  Harper & Row: New York, 1985.

"Slowing Imports," Fortune.  March 4, 1985): 43.

Wada, Tetsuro, "The Microchip Scramble," World Press Review

     (October, 1984): 54.

World Resources 1986.  Basic Books, Inc.: New York, 1986.

Young, John E., "Global Network: Computers in a Sustainable

     Society."  Worldwatch: Washington DC, September, 1993.



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