Sustainable global semiconductor supply chain network design considering ESG

Abstract

Industries, particularly semiconductor manufacturing companies, are increasingly aware of and engaged in environmental, social, and governance (ESG) management. ESG performance has become an essential business strategy. This study examines the combined effect of carbon tax, emissions trading systems (ETS), and ESG initiatives of a sample semiconductor company. We use a multi-objective mixed integer programming (MOMIP) model to investigate the production, carbon emissions, and job creation for the global supply chain of an Integrated Device Manufacturer (IDM). This study examines how an IDM's ESG initiative affects facility location selection, machine procurement, profit, and corporate social responsibility (CSR). We apply the proposed MOMIP model to a supply chain network of global semiconductor manufacturers. An example of an illustrative IDM company is used to validate the model's effectiveness. The results suggest that adopting ESG strategies does not significantly increase costs in the supply chain while reducing carbon emissions and increasing job creation. Therefore, semiconductor manufacturing companies benefit from ESG management and should put more resources into promoting it. This study contributes to the literature on developing a framework to assess ESG management in the global semiconductor supply chain. The methodology developed in this study provides a mathematical, economic, scientific and empirical basis to help manufacturers and governments with decision-making amid increased environmental costs and consciousness.