Document zdBQmn9p6gB2V1vZY05Bn3Rb0

SocioEconomic Analysis of a potential REACH Restriction on Fluoropolymers TeflonTM Perfluoro Alkoxy Revised Final Report prepared for APM division of Chemours 21 June 2023 SocioEconomic Analysis of a potential REACH Restriction on Fluoropolymers TeflonTM Perfluoro Alkoxy June 2023 Revised Final Report Quality Assurance Project reference / title Report status Author(s) Approved for issue by Date of issue J1170/SEA for Chemours APM Final Draft Report Charles James Julianne Oakley Robert White David Carlander 9 December 2022 9 June 2023, revised Final Draft 21 June 2023 Final report Document Change Record Report Version Final Draft 2.0 Final Draft 3.0 Final revised 4.0 Final Revised report 4.1 Date 16 September 2022 9 December 2022 9 June 2023 21 June 2023 Change details Comments addressed from APM, remaining sections of the report have been completed including downstream user impact assessment Additional comments addressed. Additional interviews included for semiconductors. A few comments for Chemours still present. All comments addressed Disclaimer The views and propositions expressed herein are, unless otherwise stated, those of Risk & Policy Analysts and do not necessarily represent any official view of Chemours or any other organisation mentioned in this report. Recommended citation: RPA (2023): SocioEconomic Analysis of a potential REACH Restriction on Fluoropolymers, report for Chemours, June 2023, Norwich, Norfolk, UK Executive Summary Scope and methodology An EU REACH Annex XV Restriction Proposal is being prepared for Per- and polyfluoroalkyl substances (PFAS) by five European countries. The definition used by these countries in the Registry of Intentions means fluoropolymers will fall within the scope of this restriction. Risk & Policy Analysts Ltd (RPA), UK, have been engaged by Chemours Advanced Performance Materials (APM) division to undertake a Socio-Economic Analysis (SEA) of the aforementioned Restriction in a non-use scenario versus a continued use scenario as well as an Analysis of Alternatives (AoA). The focus will be on the fluoropolymer perfluoro alkoxy (PFA, CAS 26655-00-5), trademarked by Chemours as TeflonTM PFA. The purpose of this study is to provide APM with information to understand the impacts and unintended consequences of the proposed Restriction under a continued use versus non-use scenario. The nonuse scenario is envisaged as a complete ban of PFAS from 2025 (a restriction on formulation concentrations would result in a de facto ban), which is assumed to be in full effect from 2026 accounting for a grace period to scale down production and sell remaining stocks. The assessment period is ten years (2026-2035), a theoretical timeframe for alternatives to be developed. To obtain data for the study, RPA carried out a systematic literature review (with valuable input from Chemours APM) and developed a survey which consisted of a questionnaire sent to a targeted list of stakeholders and follow-up telephone meetings between selected stakeholders and RPA. Stakeholders selected for this study included entities throughout the supply chain of TeflonTM PFA including moulders and converters, wet processing equipment manufacturers and fabrication plant owners. In total, RPA received nine responses to a targeted questionnaire and conducted six interviews with these stakeholders. TeflonTM PFA and assessed sector The fluoropolymer in the scope of the study, TeflonTM PFA, is used in a variety of industries and sectors such as chemical processing, electronics, semiconductor manufacturing, pharmaceutical and biotechnology sectors. In discussion with Chemours, the sector chosen to be the focus of this study is TeflonTM PFA used in semiconductor manufacturing equipment. Additionally impacts on the automotive sector was assessed in the event the EU could no longer manufacture its own semiconductor chips. TeflonTM PFA is an inert, highly stable and insoluble polymer. It possesses several properties such as chemical and temperature resistance and is melt processable, making it an ideal material used in semiconductor manufacturing equipment. The resistance of this material to the extreme conditions conveyed during the semiconductor manufacturing process is what allows it to have an incredibly long lifetime in these conditions and ultimately enables the manufacture of chips. The semiconductor chip has evolved greatly over the last 40 years providing computing power essential to modern day society and are present in every sector and electronic device. TeflonTM PFA is imported into Europe to the Chemours' Dordrecht site, Netherlands, and there is no processing of this material in Europe by Chemours. SEA TeflonTM PFA for Chemours APM RPA| i Hazard properties Due to the properties of TeflonTM PFA, it is considered to be persistent in the environment. However, it is not bioaccumulative or toxic due to its high molecular weight and insolubility, meaning uptake would be difficult and is unlikely to cross biological membranes. Currently, the polymer does not have any harmonised hazard classification and labelling. Case study: Semiconductors Semiconductors were chosen to be the focus of this study as a restriction on using TeflonTM PFA would have the largest impact on this market in the European Union. Semiconductor fabrication operate with the use of TeflonTM PFA to produce the core infrastructure of lithography machines and chemical distribution systems such as tubes, piping and components that transport chemicals across the fab and process tools. Access to TeflonTM PFA to produce manufacturing infrastructure and equipment to enable semiconductor manufacturing under a continued use scenario is essential and without it the semiconductor industry in the EU would cease. Not only that, but the success of Europe securing its supply of chips and its global market share in the sector is indirectly dependent on the use of TeflonTM PFA. The European Chips Act and the European Industrial Strategy are focused on the development and improvement of Europe's semiconductor industry to reduce its dependency on imports and propel Europe forward into an ever more digital age. In addition to semiconductors, RPA did an assessment on the impacts this restriction would have on the automotive industry. The electrification of vehicles is essential to the success of the Green Deal, Fit-for-55 Strategy, and Sustainable and Smart Mobility Strategy. The autonomy and electrification of vehicles are dependent on semiconductors. It can thus be inferred that the success and delivery of these objectives and strategies rely also on semiconductors. A total of five European policy objectives, directives and strategies were identified as being dependent on semiconductors and therefore dependent on TeflonTM PFA: The European Green Deal; Sustainable and Smart Mobility Strategy; Fitfor55; The European industrial strategy; and The European Chips Act. If the use of TeflonTM PFA is restricted, and the manufacture of semiconductor chips in the EU would cease, this would have large impacts on the EU objectives and strategies, as well as large knock-on effects to other industries. In reality some of these objectives, such as the European Chips Act, will simply become impossible in the event of a restriction being placed on fluoropolymers such as TeflonTM PFA. Alternatives In the analysis of alternatives an assessment of non-PFAS materials were identified as potential alternatives to TeflonTM PFA used in the semiconductor manufacturing industry. The assessment did not identify any materials as a suitable alternative to TeflonTM PFA used in the manufacture of semiconductor chips. Materials assessed included stainless steel, polypropylene, polyvinyl chloride, and polyether ether ketone. While these materials can be used in other high-performance applications, they did not simultaneously possess all the required properties that are needed to successfully enable semiconductor manufacture. SEA TeflonTM PFA for Chemours APM RPA| ii Chemical resistance and purity are extremely important to the manufacturing process and the semiconductor chips themselves. Traditional metal options such as stainless steel and copper have the potential to contaminate process chemistries with metal ions that could result in reduced production yields and wafer defects. Additionally, they did not have the corrosion and chemical resistance required to transport and store highly corrosive process chemistries. Polyvinyl chloride and polypropylene were also assessed as potential alternatives due to their widespread use in many applications. For polyvinyl chloride, the use of plasticisers to make the material more processable risks the introduction of contaminants into components. While polypropylene is known for its mouldable qualities and is a material that is melt processable, it is classed as a thermoplastic and will become liquid at its melting point (130C). This is significantly lower than the operating temperatures (260C) needed for semiconductor manufacturing. These plastics also do not possess the chemical resistance needed and would require components to be replaced in as little as one year versus TeflonTM PFA that stays within the manufacturing system for decades. Lastly, polyether ether ketone was assessed and although used in some areas of the semiconductor manufacturing process when absolutely necessary its extremely cumbersome to process and is not viable to manufacture many intricate components. It can also be prone to kinking and has absorptive qualities. Rationale and impact in the EU A PFAS restriction that bans the use of TeflonTM PFA in Europe would have immediate and significant long-lasting effects on the European semiconductor manufacturing industry. In addition, resounding knock-on effects would be felt throughout numerous other industries reliant on this technology. Without TeflonTM PFA the European semiconductor industry would collapse. Immediately making almost every sector reliant on importation of semiconductor chips from Asia and North America. Europe would lose its 10% global semiconductor chip market share and consequently fail to fulfil the objectives in the EU Chips Act and other EU strategic objectives. Chemours Impact Under a continued use scenario, it is estimated that Chemours would import a total of 7,700 to 9,300 tonnes of TeflonTM PFA into the EU for use in semiconductor manufacturing and other uses. These imports translate to a revenue and profit of 423 million to 1.0 billion and 294 million to 706 million respectively, over the assessment period. Of these imports between 3,000 and 4,700 tonnes will be specifically imported for use within the semiconductor industry generating revenues of between 169 million and 508 million resulting in profits of between 117 million and 353 million. Under a non-use scenario, Chemours APM will be forced to cease all their TeflonTM PFA related activities in Europe. This will result in a total loss of all revenue and profits stated above for both semiconductor and other uses of TeflonTM PFA. In addition to this, 629 individuals will face being made unemployed incurring a further social cost of over 111 million. At present Chemours APM have a diverse range of projects in their research and development portfolio across several sites in Europe. Over the assessment period APM will spend nearly 91 million on PFAS related R&D. This R&D is connected to PFAS but is not directly exploring alternatives to fluoropolymer materials. There is additional spending of 190 million on operational R&D to develop and improve their manufacturing processes and logistics chains. Under a non-use scenario, APM would move its fluoropolymer related R&D to outside of Europe as there would be no European sales portfolio to fund these investments. This is due to all APM products being fluoropolymers which would all become restricted. SEA TeflonTM PFA for Chemours APM RPA| iii Downstream Impact The semiconductor supply chain reliant on access to TeflonTM PFA is estimated to generate profits of over 63.4 billion under a continued use scenario. This essential supply chain subsequently permits the automotive sector to operate and generate profits of over 206 billion during the assessment period. This is likely to be an underestimation. Under a nonuse scenario this supply chain within Europe would cease operations leading to economic losses of 63.4 billion. In addition to this over 21,000 employees would face redundancy incurring a further social cost of over 3.1 billion. The automotive industry is highly reliant on semiconductors as all modern cars, especially electric vehicles have more and more electronic systems requiring processors to function. Therefore, while the automotive sector is not reliant on TeflonTM PFA itself, it is reliant on the chips that are made with the help of the TeflonTM PFA . Under a non-use scenario when just considering TeflonTM PFA, the automotive sector would be expected to switch to importing 100% of the chips it needs to operate which would not result in a loss of sales or profits. There would however still be damage to the European economy in terms of supply chain security and balance of trade implications. If a wider fluoropolymer ban is considered however chips would no longer be able to be imported as well leading to the automotive industry in Europe to collapse. This would result in an economic loss of 206 billion and see over 1.14 million people unemployed incurring a social cost of over 236 billion. However, since all electronic devices use a form of semiconductor chip, integrated circuit, or transistor, it can be assumed that all electronic and technology sectors will be impacted to some degree. A wider implication assessed is the use of fluoropolymers in a wide range of electronic components that enable around 50% of Europe's GDP. Therefore, it can be assumed that 50% of Europe's GDP, or 7.25 trillion, will be affected if all fluoropolymers are restricted. Therefore, overall access to TeflonTM PFA under the continued use scenario will permit great value to be generated and distributed across Europe but also for key strategic aims to be achieved that would otherwise not be met. Semiconductor manufacturers are planning to make investments worth tens to hundreds of billions of Euros into the establishment of new production facilities in Europe. These plans and investments are in line with the EU Chips Act and include e.g. Intel's plans to invest over 80 billion across several Member States and GlobalFoundries Inc. and ST Microelectronics $6 billion plan to construct a joint fabrication facility in France. There could be additional billions lost with as an estimated nine fabrication facilities are expected to begin construction in Europe by 2023. Semiconductor fabs cannot operate without the use of TeflonTM PFA to produce the core infrastructure machines and chemical distribution systems that transport chemicals across the fabrication and process tools. Industry sources have indicated that a restriction would place intolerable and unworkable conditions onto government subsidy proposed under the European Chips Act. Therefore, a restriction will result in the total loss of all current and future semiconductor investment and manufacturing capacity and the semiconductor industry will cease operating in the European market and focus on better geographies for investment such as North America and South Korea. SEA TeflonTM PFA for Chemours APM RPA| iv SEA TeflonTM PFA for Chemours APM RPA| v Table of Contents Executive Summary....................................................................................................................... i Table of Contents........................................................................................................................ vi Glossary.................................................................................................................................... viii 1 Introduction ......................................................................................................................... 1 1.1 Background to the study................................................................................................................. 1 1.2 Study objectives .............................................................................................................................. 1 1.3 Approach and methodology ........................................................................................................... 1 1.4 Structure of this report ................................................................................................................... 2 2 Substances within the Scope of the Study ............................................................................. 3 2.1 Fluoropolymers ............................................................................................................................... 3 2.2 EU Regulatory context .................................................................................................................... 3 3 Chemours sites and Corporate Responsibility Commitments.................................................. 7 3.1 Chemours sites in Europe ............................................................................................................... 7 4 Sectors and uses for TeflonTM PFA .......................................................................................... 9 4.1 Discussion on all uses...................................................................................................................... 9 4.2 Semiconductor industry.................................................................................................................. 9 5 Hazard properties ............................................................................................................... 25 5.1 Perfluoro alkoxy hazard properties .............................................................................................. 26 6 Analysis of Alternatives ...................................................................................................... 31 6.1 Alternatives to TeflonTM PFA in semiconductor manufacturing .................................................... 31 7 Continued use scenario....................................................................................................... 43 7.1 Introduction .................................................................................................................................. 43 7.2 Imports and profits ....................................................................................................................... 43 7.3 Emissions.......................................................................................................................................49 7.4 Value of downstream markets......................................................................................................51 7.5 Health and environmental impacts .............................................................................................. 62 7.6 Employment..................................................................................................................................63 SEA TeflonTM PFA for Chemours APM RPA| vi 7.7 Innovations and investments........................................................................................................75 7.8 Wider implications: European strategic goals, consumers, and end-users .................................. 78 7.9 Summary ....................................................................................................................................... 80 8 Nonuse scenario................................................................................................................ 83 8.1 Introduction .................................................................................................................................. 83 8.2 Import and profit losses ................................................................................................................ 84 8.3 Emissions.......................................................................................................................................84 8.4 Value of downstream markets......................................................................................................85 8.5 Health and environmental impacts .............................................................................................. 87 8.6 Unemployment ............................................................................................................................. 87 8.7 Innovation and investment losses ................................................................................................ 95 8.8 Wider implications: European strategic goals, consumers, and end-users .................................. 97 8.9 Summary ....................................................................................................................................... 98 9 Conclusions ...................................................................................................................... 100 Annex 1 Uncertainties and assumptions .............................................................................. 107 Annex 2 Consultation Response Statistics ............................................................................ 109 SEA TeflonTM PFA for Chemours APM RPA| vii Glossary Acronym AoA APM CAGR CAS CLP CPVC CRC DMSO DO EBA EC ECHA ECTFE EEA ESIA EU EV FEP FGEW FOC FPG GDP GHG HCl HDPE HF HFP HP ICE IP IRDS IXM LED NACE MMAD MRI MW MWD OECD OEM PBT Full name Analysis of Alternatives Advanced Performance Materials (Division of Chemours) Compound annual growth rate Chemical abstracts service Classification Labelling and Packaging Chlorinated polyvinyl chloride Corporate responsibility commitment Dimethyl sulfoxide Dissolved oxygen European battery alliance European commission European Chemicals Agency Ethylene chlorotrifluoroethylene European Economic Area European semiconductor industry association European Union Electric Vehicle Fluorinated ethylene propylene Functional group equivalent weight Fluorinated organic chemical Fluoropolymers product group Gross domestic product Greenhouse gases Hydrochloric acid High density polyethylene Hydrogen fluoride Hexafluoropropylene High purity Internal combustion engine Intellectual property International Roadmap for Devices and Systems Ion exchange materials Light emitting diode "nomenclature statistique des activits conomiques dans la Communaut europenne", the Statistical Classification of Economic Activities in the European Community Median mass aerodynamic diameter Magnetic resonance imaging Molecular weight Molecular Weight Distribution Organisation for economic co-operation and development Original equipment manufacturers Persistent, bioaccumulative, toxic SEA TeflonTM PFA for Chemours APM RPA| viii Acronym PC PEEK PFA PFAS PFSA PLC PP PRODCOM PTFE PVC PVDF RAC REACH RFG RMOA SDS SEA SEAC SEMI STOT SE STOT RE SVHC THF TFE TOC TSS UV VOC vPvB Full name Personal computer Polyether ether ketone Perfluoro alkoxy Per- and polyfluorinated substances Perfluoro sulfonic acid Polymer of Low Concern Polypropylene Production Communautaire. An annual survey for the collection and dissemination of statistics on the production of industrial (mainly manufactured) goods, both in value and quantity terms, in the European Union Polytetrafluoroethylene Polyvinyl chloride Polyvinylidene fluoride Risk assessment committee Registration, evaluation, authorisation and restriction of chemicals Reactive functional groups Regulatory management options analysis Safety data sheet Socio-economic analysis Socio-economic analysis committee Semiconductor equipment and materials international Specific target organ toxicity single exposure Specific target organ toxicity repeat exposure Substance of very high concern Tetrahydrofuran Tetrafluoroethylene Total oxidisable carbon Thermal Specialised Solutions Ultraviolet Volatile organic compound Very persistent, very bioaccumulative SEA TeflonTM PFA for Chemours APM RPA| ix 1 Introduction 1.1 Background to the study Per- and polyfluoroalkyl substances (PFAS) are a group of widely used synthetic organic chemicals whose properties are attributed to very strong, stable and apolar carbon-fluorine bonds. Five European countries made up of Norway, Germany, Denmark, Sweden and The Netherlands are currently preparing a restriction dossier due to be published in January 2023 under the EU REACH Regulation (EC) 1097/2006 (REACH). In the Registry of Intention of the PFAS restriction1, PFAS are defined as "fluorinated substances that contain at least one fully fluorinated methyl (CF3-) or methylene (CF2-) carbon atom (without any H/Cl/Br/I atom attached to it)". This definition is similar to the Organisation for Economic Co-operation and Development (OECD) definition2 that specifies a few noted exceptions, being "any chemical with at least a perfluorinated methyl group (-CF3) or a perfluorinated methylene group (-CF2-) is a PFAS." The substance subject of this study is the high- performance fluoropolymer TeflonTM perfluoro alkoxy (PFA) that fall under this PFAS definition. 1.2 Study objectives This study aims to objectively demonstrate the impact of a potential REACH Restriction of PFAS on Chemours APM division and its downstream customers. The overall objective of this study is to develop a Socio-economic Analysis (SEA) for the continued use of TeflonTM PFA versus the non-use scenario. The non-use scenario used in this study is envisaged as a complete ban of PFAS, meaning a ban on fluoropolymers and consequently TeflonTM PFA from 2025. In particular, this study aims to develop a SEA for TeflonTM PFA when used in the semiconductor manufacturing industry. 1.3 Approach and methodology The RPA study team has collected and analysed data to answer the study objective. Data has been collected on the: Applications relevant to the study to understand the end-uses and actors in the supply chain; Alternatives to the substances that are under investigation or currently available; Response of businesses and society to a restriction, to quantify impacts and compare to other regulatory measures. Several data sources were used to obtain relevant information concerning the properties of PFAS in the semiconductor sectors including: Analysis of the grey and academic literature for chemical and mechanical properties of the substances under study; Questionnaires, interviews and data collected via responses to our questions in consultation with Chemours APM and its subject matter experts, as well as their downstream customers. 1 Registry of Restriction intentions until outcome found here https://echa.europa.eu/registry-of-restriction- intentions/-/dislist/details/0b0236e18663449b accessed November 2022 2 OECD. Series on Risk Management No. 61, 2021. available at https://www.oecd.org/env/ehs/risk- management/series-on-risk-management-publications-by-number.htm accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 1 1.4 Structure of this report The structure of the remainder of this report is as follows: Section 2 Substances within the Scope of the Study: describes the structure, properties and regulatory context of TeflonTM PFA; Section 3 Chemours: describes the processing activities at Chemours' EU sites which involve TeflonTM PFA; Section 4 Sectors and uses for TeflonTM PFA: discusses the role of TeflonTM PFA in the semiconductor sector; Section 5 Hazard properties: describes the hazards associated with TeflonTM PFA, their release to the environment and the release of residual monomers; Section 6 Analysis of Alternatives: alternative materials to TeflonTM PFA are examined in their ability to replace PFAS in the use cases within the scope of this study. Section 7 Continued use scenario: assesses the socioeconomic landscape within Chemours APM and its downstream users should an exemption to the PFAS restriction be provided for the use cases in the scope of this study; Section 8 Non-use scenario: assesses the socioeconomic landscape of within Chemours APM and its downstream users should a PFAS restriction prohibit the use of TeflonTM PFA in the use cases within the scope of this study; Section 9 Conclusions: information gathered in this study is collated and a final commentary is made on the availability of alternatives and the overall effects of a PFAS ban versus the continued use scenario. SEA on TeflonTM PFA for Chemours APM RPA| 2 2 Substances within the Scope of the Study 2.1 Fluoropolymers The polymer within the scope of this study is TeflonTM PFA (perfluoro alkoxy CAS 26655-00-5, EC 682- 550-7). This polymer belongs to a group of polymers known as fluoropolymers. Fluoropolymers are a sub- group of per- and polyfluoroalkyl substances (PFAS) as per the Organisation for Economic Co- operation and Development3 (OECD) definition, as they contain a fully fluorinated methyl group (-CF3). TeflonTM PFA is a copolymer, meaning that it is formed from two or more different types of monomers, i.e. tetrafluoroethylene (TFE) and perfluoro alkyl vinyl ether (PxVE) comonomers. Polymers, and therefore fluoropolymers, are currently not subject to registration under REACH. As such, a full picture concerning the production tonnage volumes of these substances in the EU is not complete. Polymers, including fluoropolymers, are not considered as high a concern toxicologically as non-polymeric substances due to their very high molecular weights. This makes transport across biological membranes, such as the skin or gut-lining, unlikely. Additionally, the volume of fluoropolymers makes up <1% of global polymer production4. The presence of uniquely stable carbon-fluorine bonds provides fluoropolymers with outstanding chemical properties, making them a high-performance and unparalleled family of substances. Fluoropolymers have a unique set of properties, including durability, stability, and mechanical strength in harsh conditions, as well as chemical inertness, permeation resistance, non-wetting, non- stick and high resistance to temperature, fire, and weather5. Due to their properties, fluoropolymers have applications in many sectors including automotive, aerospace, environmental control, energy production and storage, medical, pharmaceutical, chemicals industry and electronics that are not easily replaceable with other substances or materials. The added benefits of using fluoropolymers in these applications include increased equipment reliability resulting in longer product use life, reduced spills and releases, and enabling vehicles to meet EU emission and safety standards. 2.2 EU Regulatory context Since the announcement of the five countries' intention to publish a broad restriction of PFAS6 in the EU, industry has maintained that fluoropolymers be excluded for several reasons. An independent Regulatory Management Options Analysis (RMOA)2 was commissioned by PlasticEurope's Fluoropolymers Product Group (FPG), concluded that restriction under REACH was not an effective 3 https://www.oecd.org/chemicalsafety/portal-perfluorinated-chemicals/terminology-per-and- polyfluoroalkyl-substances.pdf accessed July 2022 4 Based on 2.44 million tonnes of fluoropolymers produced in 2020 found here https://www.chemanalyst.com/industry-report/fluoropolymer-market-315 and 367 million tons of polymers produced in 2020 found here https://www.statista.com/statistics/282732/global-production-of- plastics-since-1950/. Accessed November 2022 5 https://fluoropolymers.plasticseurope.org/application/files/5416/5104/8333/20211104_FP_RMOA_Final_ 3.pdf accessed September 2022 6 https://echa.europa.eu/registry-of-restriction-intentions/-/dislist/details/0b0236e18663449b accessed August 2022 SEA on TeflonTM PFA for Chemours APM RPA| 3 tool for the adequate risk management of these substances and does not align with the need to ensure a high level of human health and environmental protection in the EU. Instead, the FPG propose a broad derogation for fluoropolymers, supplemented by a Voluntary Industry Initiative to ensure that industry will address situations of concern related to the manufacture and use of fluoropolymers. 2.2.1 Perfluoro alkoxy Perfluoro alkoxy is marketed by Chemours under the commercial name TeflonTM PFA (Figure 2-1). It is a copolymer resin, available in pellet, powder or dispersion form, and is used in the chemical processing, electronics, semiconductor, pharmaceutical, and biotechnology sectors. Figure 21: Chemours structure of perfluoro alkoxy Source: Image provided by Chemours The commercial product is the copolymer of tetrafluoroethylene (CAS 116-14-3, EC No. 204-126-9) and perfluoro alkyl vinyl ethers (PAVEs) (perfluoro propyl vinyl ether (PPVE, CAS 1623-05-8, EC No. 216-600-2) and perfluoro ethyl vinyl ether (PEVE, CAS 10493-43-3, EC No. 234-018-7)) with similar properties to TeflonTM PTFE. A significant difference between these two polymers is the alkoxy substituents of TeflonTM PFA making it melt processable, whereas TeflonTM PTFE is not7. Additionally, TeflonTM PFA is resistant to almost all solvents and chemicals8. One of its main uses today is for its corrosion and impurity protection when handling high purity chemicals in the semiconductor and chemical processing industry9. The substance has a melting point of 300-310C and can be processed into various components of all shapes and sizes due to its high melt strength and MIT flex life value >15,000 - 20,000 cycles. (Table 2-1). 7 https://www.processtechnology.com/pfa-ptfe-whats-the- difference#:~:text=Differences%20in%20alkoxy%20substituents%20allow,techniques%2C%20whereas%20 PTFE%20is%20not. Accessed November 2022 8 https://www.processtechnology.com/pfa-ptfe-whats-the- difference#:~:text=Differences%20in%20alkoxy%20substituents%20allow,techniques%2C%20whereas%20 PTFE%20is%20not. Accessed November 2022 9 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 4 Table 21: Properties of perfluoro alkoxy Property Value CAS No. 26655-00-5 EC No. 682-550-7 Tensile Strength (23-250C) 3,600-1,800 psi, 14-25 MPa Elongation (23-250C) 300-480 % Flexural Strength (23C) No break at flexure (D 790) Impact Strength (Izod) No break Yield Strength (23C) 1740 psi, 12 MPa MIT Folding Endurance (0.20mm, 8 mil film) Density >20,000 cycles 2120-2170 kg/m3 Melting Point 300-310C Thermal Conductivity 0.209 W/mK Service Temperature -250 - 260C Processing Temperature 370-395C Source documents https://www.fluorotherm.com/technical-information/materials-overview/pfa- properties/ accessed September 2022 https://www.teflon.com/en//media/files/teflon/teflonpfa440hpaproduct info.pdf?rev=63ef51ddbf6d4d099c097c67394c5215&hash=7E68C9C2B50FB30FA23461E14D8E2803 accessed November 2022 A portfolio (Table 2-2) of melt processable high purity PFA resins (TeflonTM PFA HP) are available from Chemours. These high purity grades of TeflonTM PFA have fully fluorinated stabilised end groups, meaning they will no longer be reactive or cling to metal ions. In addition, these grades have low levels of extractables, higher stress crack resistance and improved flex life (>15,000 - 20,000 cycles) compared to standard grades of PFA. TeflonTM PFA HP Plus is similar to PFA HP with the additional benefits of improved flex life or chemical stress crack resistance. Additionally, TeflonTM C PFA combines the properties or standard TeflonTM PFA with anti-static properties10. Table 22: Chemours grades of PFA for semiconductor applications Grade Description Applications TeflonTM PFA 400HP Series Fully fluorinated resins tailored to meet chemical fluid handling industry requirements for high purity and minimum extractables Injection moulding for high purity applications (fittings, valve bodies, filter housings), sheet lining for high purity chemical delivery systems TeflonTM PFA 900HP Plus Series Similar purity to 400HP series, but with improved flex life, chemical stress crack resistance and prevent microbial build-up Similar uses as 400HP series, but with longer lifetime TeflonTM PFA C-960, C-980 Provides components with an anti-static property for applications that require this. Such as the semiconductor and chemical processing industries. Cables, tubing, linings, and moulded parts that require static dissipative performance Source: https://www.teflon.com/en/products/resins/pfaresins accessed July 2022 10 https://www.teflon.com/en/-/media/files/teflon/teflon-pfa-c960-product-info.pdf accessed August 2022 SEA on TeflonTM PFA for Chemours APM RPA| 5 As a polymer, TeflonTM PFA is not a REACH registered substance and does not have a harmonised classification and labelling under Regulation (EC) No. 1272/2008. Registered users of the substance self-classified the substance and accounted for three notifications on the ECHA website. The registrants notified the polymer as not classified11. 11 https://echa.europa.eu/fr/information-on-chemicals/cl-inventory-database/-/discli/details/212887 accessed 2022 SEA on TeflonTM PFA for Chemours APM RPA| 6 3 Chemours sites and Corporate Responsibility Commitments 3.1 Chemours sites in Europe Chemours APM business has manufacturing and blending activities in three sites in Europe: Dordrecht in the Netherlands, Villers-St-Paul in France, and Mechelen in Belgium. Advanced Performance Materials (APM) division operates at all three sites. The Dordrecht site is shared with the Thermal & Specialised Solutions (TSS) division of the company, but the majority of the site is used by APM for the manufacture of fluorinated monomers, fluoropolymers and fluoroelastomers. TeflonTM PFA is imported by Chemours into Europe from the United States in varying forms such as pellets powders, or dispersions. Once received at the Dordrecht site, TeflonTM PFA is stored in a warehouse before shipment to the customers. Any waste (e.g., returned complaint material) that is received is either reprocessed, resold as second grade material or disposed of by incineration through authorisation waste handling companies. 3.1.1 Emissions abatement There are no emissions pertaining to the polymerisation of TeflonTM PFA in Europe. All processing of TeflonTM PFA fluoropolymers takes place outside Europe. While there is processing of monomers, polymerisation aids and other fluoropolymers and fluoroelastomers at the Dordrecht site, this is out of the scope of the study and emissions abatement will only be discussed briefly on a global level. Chemours has made a year 2030 Corporate Responsibility Commitment12 (CRC) to reduce greenhouse gases produced during manufacture by 60% relative to a 2018 baseline and to achieve net-zero operation emissions by 2050. Additionally, Chemours is looking to reduce air and water process emissions of fluorinated organic chemicals by 99% and to reduce their landfill volume by 70% relative to a 2018 baseline. These reduction objectives are based on global levels and are not site specific. For air and water process emissions of fluorinated organic compounds, Chemours has already achieved a 40% reduction relative to the 2018 baseline. These values are presented within the CRC report. These goals are being achieved through the installation of abatement systems to reduce fluorinated organic compound emissions to both air and water. Chemours manufacturing plant at Dordrecht has emissions currently below the tightened environmental permit levels. In 2021, improvements to water treatment processes were made at three of Chemours' sites. These improvements include the thermal destruction of addition emission streams, installation of adsorption technology for aqueous waste streams and recovery to reuse in the chemical manufacturing process13. 12 https://www.chemours.com/en/-/media/files/corporate/crc/2021/chemours-responsibility-commitment- report.pdf accessed August 2022 13 Chemours 2021 Corporate Responsibility Commitment Report https://www.chemours.com/en/- /media/files/corporate/crc/2021/chemours-responsibility-commitment-report accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 7 The exposure risks to workers are mitigated through measures depending on the physical state of the PFAS material, potential hazards of the material, and the degree of potential exposure. All workers working closely with these hazardous materials are fully trained on the hazards, procedures and protective measures that should be taken. Protective measures put in place to protect workers from exposure include dermal and respiratory personal protective equipment or the use of ventilation. Each facility using PFAS materials have risk assessments performed to evaluate the potential for worker exposure and to ensure these risks are controlled. The chemical processes using PFAS materials are within closed systems. If these closed systems need to be opened for maintenance or sampling of the chemical process for example, the requirements for opening the system are defined in authorised operating procedures or permits. SEA on TeflonTM PFA for Chemours APM RPA| 8 4 Sectors and uses for TeflonTM PFA 4.1 Discussion on all uses In the following sections the uses of TeflonTM PFA will be discussed with a focus on the semiconductor industry, and the importance of semiconductor chips to the automotive industry. This end use has been selected as the main focus area for the use of TeflonTM PFA in this report. TeflonTM PFA materials are used in many applications in addition to semiconductor manufacturing such as the chemical processing, electronics, pharmaceutical and biotechnology sectors. TeflonTM PFA can be used in many products including tubing, wiring and cabling, moulded parts, and pipe lining, among others. The substance is available in different forms such as coatings and films or dispersions, each with varying grades of purity14. Further applications using PFA include filtration housings, heat exchangers, pump housing, fittings, and others15. PFA's resistance to almost all solvents and chemicals, in addition to its flame resistance and high dielectric strength make it an attractive option to use in processes that operate under extreme conditions (e.g., highly corrosive, extreme temperature variations etc.)16. 4.2 Semiconductor industry The semiconductor industry is a fast-growing sector globally, producing semiconductor chips which are essential for modern technology and electronic devices used everywhere in society. The advancement of semiconductors has led to improved system efficiency, energy savings, and the micro scaling of electronics, in addition to advancements in communication, healthcare, transportation, clean energy, and military system technology. Not only are semiconductor chips essential to modern technology, but they are "strategic assets for key industrial value chains"17. The digital transformation of society has seen new markets for the chip industry emerge, such as highly automated vehicles, the cloud, the Internet of Things (IoT), connectivity (5G/6G), space/defence, computing capacity and supercomputers18. To secure the EU's supply, and resilience and technological leadership in semiconductor technology, the European Commission proposed the European Chips Act to help the EU achieve its targeted digital and green transition19. After the Covid-19 pandemic, a chip shortage was experienced globally having a knock- on effect throughout multiple sectors. As an example, the EU automotive sector experienced vehicle production reduced by one third in 2021 in some Member States 20. This demonstrated the reliance society and industries have on the stability of the semiconductor industry. The European Chips Act will look to increase Europe's production and market share of semiconductor technology, further 14 https://www.teflon.com/en/products/resins/pfa-resins accessed July 2022 15 https://www.processtechnology.com/pfa-ptfe-whats-the- difference#:~:text=Differences%20in%20alkoxy%20substituents%20allow,techniques%2C%20whereas%20 PTFE%20is%20not. Accessed November 2022 16 https://www.processtechnology.com/pfa-ptfe-whats-the- difference#:~:text=Differences%20in%20alkoxy%20substituents%20allow,techniques%2C%20whereas%20 PTFE%20is%20not. Accessed November 2022 17 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729 accessed November 2022 18 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729 accessed November 2022 19 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729 accessed November 2022 20 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729 accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 9 develop the skills to become a global leader in the field and reduce the EU's dependency on imports to secure the supply of semiconductors21. 4.2.1 Semiconductor manufacturing Semiconductors possess elements of both electrical conductors and insulators and are typically made from base materials such as silicon and germanium, with silicon being the most widely used22. In the overall manufacturing of semiconductor wafers and chips there are 400 to 600 steps that take place over one to two months23. Based on information gathered during consultation it is understood that the manufacture and production of semiconductor chips is carried out entirely within ultra-pure environments (See Figure 4-1). Figure 41: Semiconductor chip fabrication plant Source: https://www.protocol.com/enterprise/inteleuvfabchips accessed November 2022 Although the wafers are never exposed to air, the clean room environments are maintained through filtering systems removing nanosized particles from the air24. Workers in semiconductor manufacturing facilities are required to wear cleanroom suits to avoid human contamination. The process is conducted entirely in a closed system meaning any chemical exposure to workers is low or negligible. This gives a clear representation of how sensitive semiconductor manufacturing processes and devices are to contamination. 21 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729 accessed November 2022 22 https://www.hitachi-hightech.com/global/products/device/semiconductor/properties.html accessed July 2022 23 https://www.hitachi-hightech.com/global/products/device/semiconductor/metrology-inspection.html accessed July 2022 24 Downstream user consultation 2022 SEA on TeflonTM PFA for Chemours APM RPA| 10 Figure 42: Semiconductor chip fabrication timeline Source: https://steveblank.com/2022/01/25/thesemiconductorecosystem/ accessed June 2022 In semiconductor manufacturing during a process (See Figure 4-2) known as doping, impurities are added to the pure wafer elements (silicon, germanium) to cause changes in the conductivity of the materials' surface (step 3 in Figure 4-2)25. After polishing and film deposition, the wafer will have transistors formed on its surface and undergo several subsequent processing steps. During film deposition, the wafer is coated with a thin film that will form the wiring and transistors and is then coated with a photoresist (step 4 in Figure 4-2). The circuit pattern is then projected on the photoresist using a lithography machine (step 5 in Figure 4-2)26. Once the photoresist is developed it is used to process the film into the shape of wiring or other components (steps 6 to 9 in Figure 4-2)27. This forms one layer of the circuit, and this process is then repeated to form multiple layers of circuits. After the formation of a layer there are inspection steps to ensure the patterns have been fabricated correctly. In the case that a defect is found the process will be stopped to address the errors28. There are many metrology and inspection points that are established at critical points in the manufacturing process29. Upon completion of the manufacturing and inspection process, the wafers are cut into individual chips or dies and are then packaged (steps 11 to 12 in Figure 4-2) according to the final product it will be used in (See Figure 4-3). 25 https://www.semiconductors.org/semiconductors-101/what-is-a-semiconductor/ accessed July 2022 26 https://www.hitachi-hightech.com/global/products/device/semiconductor/process.html accessed July 2022 27 https://www.hitachi-hightech.com/global/products/device/semiconductor/process.html accessed July 2022 28 https://www.hitachi-hightech.com/global/products/device/semiconductor/process.html accessed July 2022 29 https://www.hitachi-hightech.com/global/products/device/semiconductor/metrology-inspection.html accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 11 Figure 43: Die cutting process Source: https://www.hitachihightech.com/global/products/device/semiconductor/metrology inspection.html accessed July 2022 The above briefly demonstrates the complexity of the semiconductor manufacturing process. The following sections will discuss the standards, and roles and benefits of TeflonTM PFA in the semiconductor manufacturing process, as well as key end use sectors for semiconductors. 4.2.1.1 Standards governing semiconductor manufacture SEMI standards are established and written by various players within the semiconductor industry and outline various methods of determination and purity levels of component materials used in semiconductor manufacturing30. SEMI standards are not legally binding, and it is not an industry requirement to assess and conform to, however they are often considered as de facto requirements. Typically, testing and cleanliness requirements are established between raw material supplier and component manufacturer. Standard SEMI 57 is a specification used in ultra-pure water transport that outlines what needs to be assessed, for example metallic and ionic contaminants (Table 4-2). SEMI F4031 is a practice for how to prepare components or pellets for testing, for example a seven-day extraction test is conducted where the component is placed in water for seven days to determine what contaminants are leached out. These tests are not a requirement unless a fabrication plant or equipment manufacturer asks for proof of material cleanliness. More specifically, TeflonTM PFA components and resin are monitored for impurities including metallic, ionic and total organic compounds according to SEMI C9032. Standard SEMI C90 outlines methods for testing acceptable maximum levels for extractable iron content for TeflonTM PFA resins and components. A revision of SEMI C90 is currently underway to add other metal extractable limits to the standard and align more with SEMI F57 and end user requirements. It is important to remember that materials chosen should have the mechanical properties required and 30 https://www.semi.org/en/products-services/standards 31 SEMI F40 - Practice for Preparing Liquid Chemical Distribution Components for Chemical Testing 32 SEMI C90 - Test Method and Specification for testing PFA Materials used in Liquid Chemical Distribution Systems SEA on TeflonTM PFA for Chemours APM RPA| 12 be compatible with the operating temperature of the application and the methods used for bacteria reduction, including ozone, UV light and/or hydrogen peroxide33 (Table 4-1, Table 4-3). Table 41: SEMI standard requirements Standard Contamination Limits SEMI C90 - test method and specification for testing PFA materials used in liquid chemical distribution systems <5 g/m2 for extractable iron following an extraction method below: Resin - 5% nitric acid 70C for 4 hours Components - 5% nitric acid ambient 24 hours SEMI F40 - practice for preparing liquid chemical distribution components and neat polymers for chemical testing Extraction methods: Tested as received Resin and Components - UPW 85C 7 days SEMI F57 - specification for polymer materials and components used in UPW and liquid chemical distribution systems SEMI F57-0622 specifies that pellet testing frequency, form of the material, surface area calculation methods, contamination limits and units reported shall all be part of a negotiated agreement between raw material suppliers and component manufacturers. (Table 4-2) Table 42: SEMI F570622 Limits Ionic Contaminant Ammonium Bromide Chloride Fluoride Nitrate Nitrite Phosphate Sulphate Metallic Contaminant Aluminium Arsenic Antimony Barium Boron Cadmium Calcium Chromium Copper Iron Lead Lithium Magnesium Manganese Nickel Potassium Ionic Extraction Limits (g/m2) 100 100 100 2000 100 100 100 10 Metallic Extraction Limits (g/m2) 5 2 2 15 30 2 10 1 10 5 1 2 2 5 1 10 33 https://global.ihs.com/doc_detail.cfm?document_name=SEMI%20F57&item_s_key=00502180 May 2022 accessed SEA on TeflonTM PFA for Chemours APM RPA| 13 Table 42: SEMI F570622 Limits Sodium 10 Strontium 0.5 Titanium 2 Tin 2 Vanadium 2 Zinc 5 Total organic carbon 4000 Components made from a different or new material need to be qualified in accordance with specifications usually determined further down the supply chain by fabrication plants. Fabrication plants will ask for data and proof that these new material components are pure and durable enough to be used. This can be a lengthy process and can take numerous years to qualify new materials. Typically, it will take three to five years to get base data on how the material will perform in the applications and determine its viability for use. Installation would then have to wait until there is a shut down or until the fabrication plant is forced to replace it. To qualify a new material could take a minimum of twice this time. Table 4-3 presents a non-exhaustive list of component property requirements that are needed for use in the semiconductor manufacturing process. These properties may be referred to in the Analysis of Alternatives (Section 6) and used to assess the viability of alternative materials. Table 43: Component property requirements for semiconductor manufacturing Property Description Purity Must meet high purity performance requirements for semiconductor manufacturing for low leaching potential and low particle shedding. The following address surface extractable ionic and metallic contamination limits, as well as total organic carbon extraction limits. The IRDS 2022 Yield Enhancement Report34 specifies estimated cleanliness requirements in next node generation manufacturing. The IRDS and SEMI work in collaboration to develop these standards and drive yield management solutions. Low Coefficient of Friction Temperature stability (high and low) Chemical and Permeation Resistance Processability Non-flammability SEMI F57 SEMI C90 SEMI F51 SEMI F104 Wear resistance (e.g., bearing performance), purity, article lifetime Continuous operating temperature up to 260C Must be compatible with: wastewater treatment systems, chemical distribution fluids, acids and caustics per SEMI F61 Resistant to corrosion Absence of hydrocarbons Chemical inertness UV resistance Resistance to bacterial or bio-growth Easy to mould or extrude Must pass FM 4910 standard for use in semiconductor manufacturing processes 34 https://irds.ieee.org/editions/2022/irds%E2%84%A2-2022-yield-enhancement accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 14 Table 43: Component property requirements for semiconductor manufacturing Property Description Mechanical characteristics Stability, elasticity, flexibility, low friction, low surface energy Resistant to outgassing Electrical Performance Article Lubrication Repellence properties Allows for compliance to SEMI F57 requirements for total organic carbon extraction limits Produces acceptable low VOC contamination even under conditions of chemical welding Dielectric, Resistance (static and DC discharge), tracking properties (quality of whether carbon tracks can form in the material), triboelectric, electrically insulating Low volatility in vacuum environment Long term retention of viscosity The material should not absorb water or moisture. A weathering study for TeflonTM PFA showed a moisture absorption of <3% after 24 hours in water at ambient temperature, followed by 2 hours at boiling water. These extremely stringent standards and testing requirements is what make it difficult for other materials to simultaneously meet the requirements needed, rendering them not feasible. 4.2.2 Role of TeflonTM PFA in semiconductor manufacturing The preciseness and complexity of semiconductor manufacturing requires the use of materials that enhances and compliments this process. The extensive procedures, with many stages and inspection points, demands environments and materials that are robust and do not impede on production. The use of ultra-pure materials reduces the contamination factor and ultimately result in higher product yields. Semiconductor manufacturers rely on TeflonTM PFA to prevent contamination, corrosion, and leaching in chemical fluid-handling systems that transport critical process fluids throughout the fabrication plant. A node often refers to different generations of circuits or chips and is essentially the size of the transistor35. The current node technologies are at 7 nm, with the next targets being 2 to 5 nm. The smaller a technology node, the smaller the feature size. This means smaller transistors therefore, increasing the number of transistors on a wafer leading to a more powerful and efficient chip36. New technology nodes require increased fluid-purity levels to reduce contaminants and defects and ultimately maintain acceptable wafer yields, putting greater demands on fluid-handling systems. As nodes shrink, so does the size of critical defects and the total acceptable particle count. The International Roadmap for Device and Systems (IRDS) collaborates with the SEMI organisation to establish control measures to ensure the reliability of systems is the main focus for development as node size decreases. TeflonTM PFA based fluid handling equipment allows the transfer of the purest and most reliable materials from chemical distribution to wet etch and planarization processes with low risks of contamination37. There are target purity levels that are established for chemicals used in the manufacturing process, extreme care is taken so as not to introduce contamination from the source of chemical storage. The same level of care is observed further downstream the distribution process. The semiconductor chip manufacturing process is entirely automated and the carriers (boats), wands 35 https://anysilicon.com/semipedia/technology-node/ accessed September 2022 36 https://anysilicon.com/semipedia/technology-node/ accessed September 2022 37 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing November 2022 accessed SEA on TeflonTM PFA for Chemours APM RPA| 15 and robotic arms that transport and move the wafers throughout manufacturing can also be made from TeflonTM PFA38. Particle generation or shedding can occur at these points where components are moving39. As stated in the IRDS Yield Enhancement 202240 "The performance characteristics of many of the process chemicals that are used for etching, plating, CMP and cleaning depend heavily on the amount and type of foreign material present as well as the consistency from batch to batch that is used in the process. The integrated effects of variability in the performance of these chemistries will play a significant role in the defect control within the manufacturing process." As the industry's requirements have evolved to become ever more demanding, the development of improved generations of fluoropolymers is critical to meet the needs of the industry. TeflonTM PFA is an inert fluoropolymer that possesses qualities to enable the delivery of high purity fluids and the transportation of the wafers throughout the manufacturing process without contamination. This is achieved as TeflonTM PFA has very low leaching potential and particle shedding, as well as high levels of corrosion resistance and durability, meaning it can be used directly for manufacturing components41, such as process vessels, pipes and fittings, tubing, valves and pumps, storage and transport containers, filters, and sensors42. These components come in contact with process chemistries used during the etching or rinsing stages, as well as with the wafer itself. The intrinsic qualities of TeflonTM PFA provides optimal technical functionalities and do not present any risks to disrupt the sensitive manufacturing process. Materials used to make tubing and other components used in chemical distribution that come in direct contact with process chemistries need to be resistant to corrosive chemicals for an extended duration, as well as having low moisture permeation43. Specific purity grades of TeflonTM PFA allows excellent surface smoothness to be achieved. This contributes to enhanced cleanability and faster flushing times to guarantee low levels of particulates in process chemistries44 (See Figure 4-4). When a fabrication plant starts up the components and tubing used will be flushed to ensure tubing and components are clean and a good particle baseline is established before production begins. Sometimes, this flushing is done for upwards of 6 months45. A smooth surface ensures there are no particles being trapped and built up while also reducing flushing time to ensure a quicker start up. 38 Downstream user consultation June 2022 39 INTERNATIONAL ROADMAP FOR DEVICES AND SYSTEMSTM 2022 UPDATE YIELD ENHANCEMENT THE IRDS IS DEVISED AND INTENDED FOR TECHNOLOGY ASSESSMENT ONLY AND IS WITHOUT REGARD TO ANY. (2022). 40 INTERNATIONAL ROADMAP FOR DEVICES AND SYSTEMSTM 2022 UPDATE YIELD ENHANCEMENT THE IRDS IS DEVISED AND INTENDED FOR TECHNOLOGY ASSESSMENT ONLY AND IS WITHOUT REGARD TO ANY. (2022). 41 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing accessed July 2022 42 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing accessed July 2022 43 https://www.teflon.com/en/-/media/files/teflon/teflon-semicon-brochure.pdf accessed July 202243 https://www.teflon.com/en/-/media/files/teflon/teflon-semicon-brochure.pdf accessed July 2022 44 https://www.teflon.com/en/-/media/files/teflon/teflon-semicon-brochure.pdf accessed July 202244 https://www.teflon.com/en/-/media/files/teflon/teflon-semicon-brochure.pdf accessed July 2022 45 APM personal communication 2022 SEA on TeflonTM PFA for Chemours APM RPA| 16 Figure 44: Surface smoothness comparison of conventional PFA and TeflonTM PFA 451HP Source: https://www.teflon.com/en//media/files/teflon/teflonsemicon brochure.pdf?rev=92a3c5d5cd884fffbddeb5221cce4ad2 accessed July 2022 Typically, materials or components used in the semiconductor manufacturing process should meet industry standards such as SEMI F5746 (a specification used in ultra-pure water transport that outlines what needs to be assessed, for example metallic and ionic contaminants) and SEMI C9047, 48 (which outlines methods for testing acceptable maximum levels for extractable iron content for TeflonTM PFA resins and components) among others. These extremely stringent standards make it difficult for other materials to meet them, while simultaneously possessing the physical and chemical properties (e.g., chemical/corrosion resistance, high purity, durability and thermal resistance) needed for semiconductor applications. Since TeflonTM PFA can be used in varying components throughout the process, it has an established importance with benefits largely due to the inertness of the polymer and its complimentary properties. 4.2.2.1 Benefits of TeflonTM PFA TeflonTM PFA offers a combination of properties and performance characteristics that other materials cannot meet simultaneously. These inherent properties of TeflonTM PFA are what makes it suitable for use in the semiconductor manufacturing process. Its ability to remain functional at a range of temperatures, including at continuous operating temperature of up to 260C combined with its very high chemical resistance make it the ideal material for semiconductor manufacturing. TeflonTM PFA is inert to a variety of very harsh chemicals (See Table 6-2), including: Strong mineral acids; Inorganic bases; Inorganic oxidants; Organic acids; Organic solvents; Fluorocarbons. 46 https://store-us.semi.org/products/f05700-semi-f57-specification-for-polymer-materials-and-componentsused-in-ultrapure-water-and-liquid-chemical-distribution-systems? accessed July 2022 47 https://store-us.semi.org/products/c09000-semi-c90-test-method-and-specification-for-testingperfluoroalkoxy-pfa-materials-used-in-liquid-chemical-distribution-systems? accessed July 2022 48 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing/high-purity accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 17 TeflonTM PFA has superior stress crack resistance, excellent flex life and UV performance to perform in the demanding high-stress manufacturing environment49. Additionally, its unsurpassable mechanical properties mentioned in Section 2.2.1 add to these benefits as it is inherently strong due to its tensile strength, flexural strength and Izod impact strength. TeflonTM PFA enables the semiconductor manufacturing industry and therefore enabling many other sectors in the EU and attributing to 50% of EU GDP. Additional benefits of PFA here are extended lifetime of components compared to traditional plastics having to be replaced every year or few years, that could result in additional expenses and downtime of the fabrication plant. In summary, the main functionalities offered by TeflonTM PFA to enable the semiconductor manufacturing process include (see 6.1.1 for a description of these properties): Superior chemical and corrosion resistance to almost all solvents and chemicals; Extremely low leachability, permeability and low particle shedding; High continuous operating temperatures and melt processability; Low coefficient of friction; Good dielectric properties and Superior crack resistance at high temperature. The functionality and role of TeflonTM PFA will be discussed in further detail in Section 6.1.1. 4.2.3 Overview of the semiconductor industry The unique properties of fluoropolymers enable the production of semiconductor chips. It can be assumed, based on information gathered during consultation, that without fluoropolymers the manufacture of these chips would be severely impacted or cease altogether, consequently impacting a large number of industries. Semiconductors are used in a wide variety of industries and applications and are found in almost every electronic device50, including computers, smartphones, cameras, televisions, life-saving medical devices, washing machines, refrigerators, and cars etc. Semiconductors enable the use of technologies that underpin today's society, which would not be able to function in the same way (knowledge sharing, digital communication) should their use be restricted.51 The European Semiconductor Association (ESIA) reported in February 2022 that semiconductor sales in Europe have increased by 27.3% compared to 2020 with the market reaching 47.22 billion in 202152. In July 2022, global semiconductor sales were approximately 49.0 billion with sales in Europe reaching 4.46 billion53. This equates to an increase in European sales of 15.2% versus the same month in 2021. It was observed that growth across all end-use areas was consistent, being led by wired communication, consumer, and computer uses54. Recent data indicates the automotive chip market represents 37% of European semiconductor sales and is the biggest end-use sector in Europe55. The 49 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing accessed July 2022 50 https://www.hitachi-hightech.com/global/products/device/semiconductor/life.html accessed July 2022 51 https://www.semiconductors.org/semiconductors-101/what-is-a-semiconductor/ accessed July 2022 52 https://www.eusemiconductors.eu/sites/default/files/ESIA_WSTS_PR_2112.pdf 53 https://www.eusemiconductors.eu/sites/default/files/ESIA_WSTS_PR_2207.pdf accessed November 2022 54 https://www.electronicspecifier.com/news/european-semiconductor-sales-up-20-4-year-on-year accessed July 2022 55 https://www.eusemiconductors.eu/esia accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 18 global automotive integrated circuit market is expected to grow 23% in 2022 due to the shift to electric vehicles and enhanced safety features56. 4.2.3.1 Semiconductors used in the automotive industry The use of semiconductors in the automotive sector is experiencing a high growth rate at a CAGR of 8.4% with expected growth from 59.22 billion in 2022 to 103.85 billion in 202957. This market growth is due to the increased use of battery powered vehicles and in self-driving cars. A vehicle today is likely to contain 5,000 to 8,000 semiconductor chips58. This number can expect to increase as vehicles become more autonomous. By 2030 it is estimated that half a vehicles value will be in the vehicles electronic systems, meaning that 50% of a vehicles cost will be for semiconductor components59. Semiconductor chips are used in multiple functions of the vehicle, such as auto braking and stabilisation systems, airbags, lambda sensors, LED headlights, air conditioning systems, optimised motor power consumption and EV batteries, to name a few60. Additionally, the advancements of onboard computer systems to predict traffic patterns and road closures as well as collision avoidance require the systems to read and process millions of lines of code per second. Semiconductors ensure a car's systems can be connected and deliver this in real-time61. Figure 4-5 shows the areas in an internal combustion engine vehicle where semiconductor chips are essential to the fail-safe automation of these systems. 56 SEMI West 2022 Day 1 SEMI Market Symposium agenda can be found here: https://www.semiconwest.org/programs/market-symposium 57 https://www.fortunebusinessinsights.com/automotive-semiconductor-market-106780 accessed November 2022 58 Entegris, & Inc. (n.d.). Examining the Small, Medium, and Large of Preventing Automotive Latent Defects White paper 59 Entegris, & Inc. (n.d.). Examining the Small, Medium, and Large of Preventing Automotive Latent Defects White paper 60 https://auto.hindustantimes.com/auto/news/heres-where-all-you-can-find-semiconductor-chip-in-vehicles- 41642934664014.html accessed July 2022 61 https://www.azom.com/article.aspx?ArticleID=20354 accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 19 Figure 45: Areas of an automobile where semiconductors are esential Source: https://semiengineering.com/foundriesaccelerateautoefforts/ accessed July 2022 While there are some applications where semiconductors are used, and a device failure may be inconvenient but not critical (such as in a household washing machine) semiconductors used in automobiles are essential to the functioning of important systems to safely operate the vehicle. As shown in the Figure above, the importance of reliability of systems such as sensing, power steering and emergency braking are critical to the safety of passengers. See Figure 4-6 for the average lifetime expectancy of chips in different applications. This demonstrates the importance of chip reliability in automotive vehicles. SEA on TeflonTM PFA for Chemours APM RPA| 20 Average lifetime of semiconductor chips 25 20 15 Years 10 5 0 Industrial Automotive Appliances Servers Smart Phones Consumer Electronics Applications Avg. Min. Avg. Max. Figure 46: Average chip lifetime Source: INTERNATIONAL ROADMAP FOR DEVICES AND SYSTEMSTM 2022 UPDATE YIELD ENHANCEMENT THE IRDS IS DEVISED AND INTENDED FOR TECHNOLOGY ASSESSMENT ONLY AND IS WITHOUT REGARD TO ANY. (2022). As vehicles rely heavily on automated systems the criticality of identifying semiconductor chip defects increases significantly. Chip defects are typically classified in three categories: large (killer) defects, medium defects, and small (latent) defects (See Figure 4-7). As the size of a defect decreases so does its ability of being detected by a metrology system62. Latent defects and contaminants (particles, gels, metal ions, and organics) that are embedded in the chip layers that go undetected will cause reliability failures over time, such as electromigration, oxide breakdown, hot carrier injection, stress-induced cracking and negative bias temperature instability. These failures can result in latent defects causing system failures in vehicles months or years after installation. These system failures could lead to costly recalls or passenger fatalities. 62 Entegris, & Inc. (n.d.). Examining the Small, Medium, and Large of Preventing Automotive Latent Defects White paper SEA on TeflonTM PFA for Chemours APM RPA| 21 Figure 47: Semiconductor chip defects Source: Entegris, & Inc. (n.d.). Examining the Small, Medium, and Large of Preventing Automotive Latent Defects White paper. The electrification and autonomy of motor vehicles has increased pressure on semiconductor fabrication plants to prevent or identify latent defects before they are installed. The removal of large (killer) defects has been the main focus of automotive chip suppliers to improve chip yields63, but the control of latent defects has since become a priority. Latent defects related to particle and metal ion contamination will likely introduce new reliability levels. This can be achieved through more advanced filtration purification steps in combination with metrology inspection. In addition, the purity of materials and process fluids will likely shift and adapt more stringent standards to ensure particle and metal ion contamination is eliminated. The advancement of autonomous automobiles is closely linked to the use of semiconductors64. As mentioned previously, semiconductors are a critical component in making electric powered vehicles assisting second-hand CO2 emission reductions and oil dependency. 4.2.3.2 Semiconductors in other applications Semiconductors are important components to most modern technology and consumer electronics, including computers, gaming consoles, kitchen appliances, smart phones, and medical devices among 63 Entegris, & Inc. (n.d.). Examining the Small, Medium, and Large of Preventing Automotive Latent Defects White paper 64 https://www.azom.com/article.aspx?ArticleID=20354 accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 22 others. As seen in Figure 4-8, semiconductors are used in every digital device and are essential in technology advancements. Figure 48: Applications semiconductors are used in Source: SEMI Chemical Watch Presentation 27 November 2020 https://www.semi.org/sites/semi.org/files/202012/SEMI%20Chemical%20Watch%20Presentation.pdf accessed August 2022 For example, semiconductors are used in numerous medical devices including magnetic resonance imaging (MRI) machines, pacemakers, portable ultrasound devices, ventilators, insulin pumps, blood gas analysers, blood pressure monitors, and patient monitors65. Pacemakers are expected to last for an extended period of time and contain two different semiconductors that work together. Semiconductors used in insulin pumps allows the devices to be wireless and tubeless, as well as providing detection technology66. 4.2.4 Supply chain Chemours provides TeflonTM PFA in its resin pellet or powder form to component moulders and converters. Moulders and converters melt the TeflonTM PFA to mould and form the material to specified components. The components are then sent on to wet process equipment manufacturers and contractors/engineering companies. The contractors/engineering companies are typically hired by wet process equipment manufacturers or fabrication plants to design and install new equipment. Wet process equipment manufacturers then use these components to build the equipment and lithography machines used in the semiconductor chip manufacturing process. This equipment is then sold on to fabrication plant owners, who then manufacture the semiconductor chips. See Figure 4-9. 65 https://www.waferworld.com/post/semiconductors-and-the-medical-industry-a-guide accessed July 2022 66 https://www.waferworld.com/post/semiconductors-and-the-medical-industry-a-guide accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 23 Figure 49: Semiconductor supply chain overview Source: APM personal communication 2022 The decision makers that influence material specification can be at any point in the supply chain depending on the end customer and application. For example, component manufacturers establish specification requirements with the raw material supplier in order to meet the needs of the fabrication plants. SEA on TeflonTM PFA for Chemours APM RPA| 24 5 Hazard properties This section will present the hazard properties of TeflonTM PFA. This includes its monomers and any processing aids that are used during the polymerisation process. Fluoropolymers are a specific sub- category of PFAS and are high molecular weight polymers and can be assessed according to criteria to determine its hazard level67. The OECD Expert Group on Polymers concluded that "Polymers of low concern are those deemed to have insignificant environmental and human health impacts"42. The remainder of this section will discuss these criteria and present the key values for the substances within this study. Due to the large molecular weight of polymers, they are considered too large (> 1000 - 10000 Dalton) to cross biological membranes and exhibit hazardous properties. Molecular weight is the most commonly used criteria when assessing polymers42. Polymers presenting the most potential health concerns will have a number average molecular weight (Mn) <1000 Dalton (Da) and oligomer content >1%42. Monomers, oligomers, and degradation products from the polymerisation process are smaller and therefore can potentially cross biological membranes and therefore have the potential to be hazardous. It is important that the oligomer % and residual monomers are considered to assess the leachability of the polymer, values are presented in Table 5-1. The presence of Reactive Functional Groups (RFGs) can be associated with adverse human health and ecotoxicology42. The Functional Group Equivalent Weight (FGEW) determines if the RFGs are diluted by polymeric material and is used as an indication of how reactive the polymer is42. The polymeric charge is important to consider because charge can influence how a polymer acts and its properties. For example, cationic polymers have been associated with aquatic toxicity (Henry et al. 2018) (see Table 5-1). In summary, according to Henry et al. (2018) and the OECD68, the properties affecting a polymer assessment include the following: Molecular Weight (MW): A polymer with a low molecular weight could indicate a potential for health and ecotoxicological concerns. Polymer composition: This relates to the monomers, oligomers and processing aids used during polymerisation. These will have lower molecular weights potentially making them more hazardous. Polymer charge: Charge can influence how a polymer acts and its properties including, physical properties, fate, ecotoxicity, and human toxicity. Structural features: This includes its reactive functional groups (RFGs) and particle size. Solubility and stability: Low solubility in water and n-octanol demonstrate the inability of fluoropolymers to actively cross cell membranes and bioaccumulate. While stability shows the durability of the polymer and likelihood of breaking down into smaller molecules. 67 Henry, B. J., Carlin, J. P., Hammerschmidt, J. A., Buck, R. C., Buxton, L. W., Fiedler, H., Seed, J., & Hernandez, O. (2018). A critical review of the application of polymer of low concern and regulatory criteria to fluoropolymers. Integrated Environmental Assessment and Management, 14(3), 316-334. https://doi.org/10.1002/IEAM.4035 accessed September 2022 68 JOINT MEETING OF THE CHEMICALS COMMITTEE AND THE WORKING PARTY ON CHEMICALS, PESTICIDES AND BIOTECHNOLOGY DATA ANALYSIS OF THE IDENTIFICATION OF CORRELATIONS BETWEEN POLYMER CHARACTERISTICS AND POTENTIAL FOR HEALTH OR ECOTOXICOLOGICAL CONCERN JT03258707 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format. (2009). https://www.oecd.org/env/ehs/risk-assessment/42081261.pdf accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 25 Each of these properties will be assessed for the substances within this study. 5.1 Perfluoro alkoxy hazard properties Perfluoro alkoxy (CAS 26655-00-5, EC 682-550-7) is the copolymer of tetrafluoroethylene (CAS 116- 14-3, EC 204-126-9), perfluoro propyl vinyl ether (PPVE, CAS 1623-05-8, EC No. 216-600-2) and perfluoro ethyl vinyl ether (PEVE, CAS 10493-43-3, EC No. 234-018-7). It is a high-performance thermoplastic material that is used in many applications. 5.1.1 Classification and labelling Like all polymers, Teflon TM PFA is not a REACH registered substance and does not have a harmonised classification and labelling under Classification Labelling and Packaging (CLP) Regulation (EC) No. 1272/2008. Self-classification of substance registrants on ECHA report a total of 3 notifications of classification and labelling69, with each notifier registering it as "not classified". Given the inert nature of the polymer, hazardous properties are not expected. The representative EU Safety Data Sheet (SDS) for PFA Fluoroplastic Resin 450HP X indicates it is not hazardous70. Tetrafluoroethylene (TFE, CAS 116-14-3, EC 204-126-9), a monomer used in the production of PFA , is a REACH registered substance and currently a harmonised classification and labelling under Regulation (EC) No. 1272/2008 is not published but has been adopted by The Committee for Risk Assessment (RAC). The Committee developed their opinion in December 201971 and was in agreement that the substance should be classed as carcinogenic category 1B under Regulation (EC) No. 1272/2008. The dossier evaluation has been concluded and the opinion adopted, however, it has not yet been published. The registration dossier72 classifies the substances as extremely flammable gas (H220), gas under pressure (H280), STOT SE 2 (H371, kidney), and carcinogenic 1B (H350). The latter is aligned with the adopted opinion of the RAC in an assessment of regulatory needs that was carried out in 2018. Perfluoro propyl vinyl ether (PPVE), a comonomer used in the production of PFA, is a REACH registered substance but does not have a harmonised classification and labelling under Regulation (EC) No. 1272/2008. The registration dossier73 classifies the substance as an eye irritant 2 (H319). There are currently no assessments for regulatory need for this substance. Perfluoro ethyl vinyl ether (PEVE), a comonomer used in the production of PFA, is a REACH registered substance but does not have a harmonised classification and labelling under Regulation (EC) No. 1272/2008. The registration dossier74 classifies the substance a flammable gas 1A (H220) and a liquefied gas (H280). There are currently no assessments for regulatory need for this substance. 69 https://echa.europa.eu/information-on-chemicals/cl-inventory-database/-/discli/details/212887 accessed September 2022 70 PFA Fluoroplastic Resin 450HP X SDS No. 1854290-00012 Chemours; 9 December 2020 71 https://echa.europa.eu/documents/10162/becfc8d6-8a83-a81e-27d7-abadc6c7b585 accessed September 2022 72 https://echa.europa.eu/registration-dossier/-/registered-dossier/15453 accessed November 2022 73 https://echa.europa.eu/registration-dossier/-/registered-dossier/23696/2/1 accessed November 2022 74 https://echa.europa.eu/registration-dossier/-/registered-dossier/21612 accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 26 5.1.2 Perfluoro alkoxy (PFA) characteristics Table 5-1 presents the characteristics of PFA. Table 51: Assessment criteria for a polymer of low concern Criteria Value Polymer composition (must have C, H, Si, S, F, Cl, Yes Br, or I covalently bound to C) Molecular Weight Characteristics: Mn > 1000 Da and oligomer content < 1% 200,000 - 450,000 Molecular Weight Distribution (MWD) number average Mn (Mn and heterogeneity of MW 1.7 distribution indicate if majority are >1000 or <1000 Da, which could penetrate the cell) Wt % oligomer (5% for <1000 Da oligomer, 2% for Negligible <500 Da oligomers) Polymer composition: Residual monomer <50 ppb Ratio of residual monomers to MW (more low MW monomer content per mole increases bioavailability and hazard potential) ~10-13 Polymer charge (cationic polymers associated with aquatic toxicity; polycationic with adverse human health effect) Neutral Reactive functional groups (RFGs) (some highly reactive functional groups associated with <1 adverse human health and ecotoxicology effects, e.g., acrylates, isocyanates, anhydrides, aziridines) Functional group equivalent weight (FGEW) (the lower the FGEW, the more reactive the polymer and the higher the potential for health and >105 environmental impact) (defined as the ratio of Mn to the number of functional groups in the polymer) Low molecular weight leachables (MW < 1000 Da No active leachables by USP class V1 (121C) able to enter cell) Physiochemical properties: Water solubility (water solubility <10 mg/L showed generally low health concerns; 10 mL/L to Practically insoluble or insoluble 10000 mg/L had potential health concern) Lipid solubility Practically insoluble or insoluble Octanol- water partition coefficient, Log Kow (higher Kow associated with lipophilicity and a high N/A potential to bioaccumulate or bioconcentrate) Hydrolysis (breaking into Mn < 1000 Da increases Stable hazard potential) Light (h) (breaking into Mn < 1000 Da increases Stable hazard potential) Biodegradation (aerobic and anaerobic) (breaking Stable into Mn < 1000 Da increases hazard potential) Thermal stability and normal operating temperatures 260C SEA on TeflonTM PFA for Chemours APM RPA| 27 Table 51: Assessment criteria for a polymer of low concern Criteria Value Particle size (median mass aerodynamic diameter, 50-250 m (powders) MMAD, should be >5 m) Source: Henry, B. J., Carlin, J. P., Hammerschmidt, J. A., Buck, R. C., Buxton, L. W., Fiedler, H., Seed, J., & Hernandez, O. (2018). A critical review of the application of polymer of low concern and regulatory criteria to fluoropolymers. Integrated Environmental Assessment and Management, 14(3), 316-334. https://doi.org/10.1002/IEAM.4035 As reported in OECD (2009), Henry et al. 2018, and EC (2020)75 state that substances with a Mn > 1000 Da and oligomer content <1% are not expected to be absorbed through the skin and present health hazards. PFA has a Mn range of 200,000-450,000 Da, thus larger than the 1000 Da criterion, a molecular weight distribution of 1.7 and a negligible oligomer content of less than 1%. These values indicate that PFA does not present any potential hazardous concerns, based on these criteria. The polymer will contain up to 50 ppb of the monomers used with the ratio of residual monomer to Mw being negligible (~10-13). Additionally, there are no active leachables and the residual content of processing or polymerisation aid in TeflonTM PFA is low and therefore is likely not of concern. The polymer has no charge and does not contain any reactive functional groups. These characteristics indicate that the polymer is of low toxicological concern according to criteria. The particle size of the powder is 50-250 m. The other physio-chemical properties reported in Table 5-1 do not indicate that TeflonTM PFA is potentially hazardous (the polymer is not soluble in water or lipids, and no degradation is expected). 5.1.3 Environmental properties Due to the high molecular weight, toxicity to soil, aquatic or sediment organisms is not likely. According to the substances SDS, there is no data available regarding these studies. PFA is insoluble in water, therefore there is no potential of toxicity to aquatic organisms. The large molecular weight of the polymer means that biological uptake is not expected to take place, and therefore no toxicity to sediment and soil organisms, as well as bioaccumulation, is expected76. The polymer is inert, and it is not biodegradable based on its structure. PFAS are known to be very persistent and stable in the environment77. Overall, there are not many data on the environmental properties, but toxicity appears to not be of concern, as well as bioaccumulation, due to the inherent properties of the polymer. The substance is considered to be persistent, without bioaccumulative or 75 European Commission, Directorate-General for Environment, Bougas, K., Corden, C., Crookes, M., et al., Scientific and technical support for the development of criteria to identify and group polymers for registration/evaluation under REACH and their impact assessment : final report, Publications Office, 2020, https://data.europa.eu/doi/10.2779/890644 accessed September 2022 76 European Commission, Directorate-General for Environment, Bougas, K., Corden, C., Crookes, M., et al., Scientific and technical support for the development of criteria to identify and group polymers for registration/evaluation under REACH and their impact assessment : final report, Publications Office, 2020, https://data.europa.eu/doi/10.2779/890644 accessed September 2022 77 https://echa.europa.eu/hot-topics/perfluoroalkyl-chemicals-pfas accessed April 2022 SEA on TeflonTM PFA for Chemours APM RPA| 28 toxic properties, persistence is less of a concern. This conclusion is also supported by the Canadian assessment of PFA78. 5.1.4 Human health properties There is limited data available on the toxicity of PFA to humans. Its large molecular weight means uptake would be difficult and it's unlikely to cross biological membranes. There is no data available on its bioaccumulation potential. TeflonTM PFA is not at risk of being dispersed via air in the form of dust particles and therefore does not pose an inhalation risk. Low-molecular weight fluorinated monomers and the products of thermal decomposition of fluoropolymers, however, can be acutely toxic and harmful to health. Caution must be used when processing fluoropolymers in order for fluoropolymers to remain in their inert and non-hazardous state. Fluoropolymer handling guidelines79 have been published and address the main routes for release of harmful substances from fluoropolymers. The SDS indicates the thermal decomposition products of PFA to be hydrofluoric acid, carbonyl difluoride, carbon dioxide and carbon monoxide. These decomposition products present several hazards (see Table 5-2). Table 52: Thermal decomposition products of PFA Substance Workplace exposure limits (Time Weighted Average) Carbonyl Fluoride 2 ppm (COF2) Carbon Monoxide (CO) 25 ppm Carbon Dioxide (CO2) Asphyxiant, may cause dizziness in concentrations greater than 5% Hydrofluoric acid (HF) 3 ppm 2.5 mg/m3 Source: Chemours SDS 185460800008 9 December 2020 Hazard Properties Acute Toxicity - Inhalation (Cat. 2) Skin Corrosion/Irritation (Cat. 1) Serious Eye Damage (Cat. 1) Specific target organ toxicity - Single Exposure (Cat. 1) (lungs) H220 Flammable gases (Cat.1) H331 Acute toxicity - Inhalation (Cat. 3) H360D Reproductive toxicity (Cat 1A) H372 Specific target organ toxicity - repeated exposure, inhalation (Cat. 1) Does not have a harmonised classification and labelling 1,185 notifications H280 Gas under pressure, may explode if heated H281 Refrigerated liquid, may cause cryogenic burns H300 Acute toxicity, Oral (Cat. 2) H330 Acute toxicity, Inhalation (Cat. 2) H310 Acute toxicity, dermal (Cat.1) H314 Skin corrosion (Sub-cat 1A) H318 Serious eye damage (Cat. 1) 78 Search for CAS 26655-00-5 on https://canadachemicals.oecd.org/Search.aspx accessed September 2022 79 Guide for the Safe Handling of Fluoropolymer Resins. (2021). https://fluoropolymers.plasticseurope.org/application/files/6216/3178/0517/Fluoropolymers_Safe_Hand_ EN__June_2021.pdf accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 29 5.1.5 PBT/vPvB assessment REACH Annex III and XIII present the persistent, bioaccumulative and toxic (PBT) and very persistent and very bioaccumulative (vPvB) criteria, and the information requirements that can be used in the PBT/vPvB assessment. P/vP - persistency: the half-life of PFA is not measured in any compartments but is expected to be in the order of years, therefore exceeding vP criteria. Therefore, PFP meets the P/vP criteria. B/vB - bioaccumulation: Due to the large molecular weight of the substance it is not expected to bioaccumulate. T - toxicity: the substance is not classified as carcinogenic (category 1A or 1B), germ cell mutagenic (category 1A or 1B), or toxic for reproduction (category 1A, 1B or 2), nor is there other evidence of chronic toxicity, as identified by the substance meeting the criteria for classification: specific target organ toxicity after repeated exposure (STOT RE category 1 or 2). There is no data available to confirm on toxicity, however due to its lack of water solubility and other characteristics suggesting it is a polymer of low concern, it is likely the substance is not T. Based on the above information, it is possible to conclude that PFA is P, not B, and not T according to Annex III to the REACH Regulation. Similarly, it is possible to conclude that PFA is vP and not vB. Overall, PFA does not meet the PBT/vPvB criteria. 5.1.6 Conclusions on PFA hazards The polymer is inert and based on its characteristics it is unlikely to have any toxicological hazards. The available information indicates that the hazard of concern is persistency. SEA on TeflonTM PFA for Chemours APM RPA| 30 6 Analysis of Alternatives This Analysis of Alternatives (AoA) provides an analysis on the feasibility of potential alternatives to TeflonTM PFA in the semiconductor sector. It will assess the potential alternatives' economic feasibility, technical feasibility, availability, and hazard properties. As the proposed restriction covers all PFAS, the focus of this AoA will be on non-PFAS alternative materials. This section will be referenced in the non-use scenario to better predict the associated impacts of a potential restriction. Further details on the semiconductor manufacturing processes are discussed in Sections 4.2. 6.1 Alternatives to TeflonTM PFA in semiconductor manufacturing 6.1.1 Performance requirements of materials used for fluid handling in semiconductor manufacturing PFAS are used throughout the manufacturing of semiconductor chips, from refrigerants to lubrication oils and greases, manufacturing equipment components and factory infrastructure80. The components used in the semiconductor manufacturing process that have particularly high- performance requirements are those that convey process chemistries (fluids) such as, ultra-pure water and chemicals, and manufacturing equipment components that directly handle the wafer81. More specifically, TeflonTM PFA is used in numerous components throughout the semiconductor manufacturing process including, process vessels, pipes and fittings, tubing, valves and pumps, storage and transport containers, filters, and sensors82. TeflonTM PFA will be used in these components due to its chemical and corrosion resistance to convey highly corrosive chemicals. In addition, the required functionality of materials used for such components include the ability to maintain low contamination (high purity and low particle shedding), and structural integrity when in contact with highly corrosive chemicals and high temperatures. See Table 6-1 for descriptions of these required properties. Table 61: Essential material properties used for components in equipment used for semiconductor manufacturing Property Description Low leaching potential and Substances used for the transportation of ultra-pure fluids must have impurities very low leaching potential (less than 100 part per trillion83) to ensure there are no impurities, such as metal ions, that will contaminate the fluids via leaching from the equipment materials. Any materials in contact with the wafer must be free from impurities to maintain an ultra-pure environment. Low particle shedding During the manufacturing process there are many moving parts that could shed particles through operation, the material used should be resistant to this to minimise the generation of contaminant particles. Low surface roughness In line with low particle shedding, a material with a rough surface will more easily trap particles and make cleaning processes more intensive. See Section 4.2.2 on fabrication plant start up times. 80 https://www.semi.org/en/blogs/semi-news/fluorinated-chemicals-are-essential-to-semiconductor- manufacturing-and-innovation accessed November 2022 81 Downstream user consultation June 2022 82 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing accessed June 2022 83 https://www.asahi-america.com/images/x- assets/PDF/Article_Plastics_in_Chemical_Processing_and_Semiconductor.pdf accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 31 Table 61: Essential material properties used for components in equipment used for semiconductor manufacturing Property Description Chemical resistance The material should be chemically inert so as not to react, break down or generate contaminants when in contact with the ultra-pure chemicals. Corrosion resistance The material must be able to withstand corrosive chemicals over a prolonged period so as not to react, breakdown or generate contaminants when in contact with the ultra-pure chemicals. Moisture resistance The material should be resistant to moisture and not have any absorptive qualities as this can break down the material or risk bacteria growth. Durability The material should be durable and resistant to cracking to ensure the pressurised water does not break the piping structure. A higher molecular weight and/or comonomer content corresponds with higher resistance to cracking. Crack resistance The tubing process is dynamic with temperature changes and there is a lot of bending that can lead to stress. If the material is not resistant microcracks can form and there will be loss of material into the surroundings and potential contamination introduced Weldability High weldability is required to ensure piping units can be assembled specifically in relation to the facility layout without weakening the piping or resulting in gaps between units. Source: Downstream User Consultation Low leaching potential and high purity of component materials is extremely important to ensure there are no impurities or contamination present during the processes carried out for semiconductor manufacturing. As the total amount of tolerable contaminants decreases the cleanliness and corrosion resistance of materials becomes more critical, with impurities being measured on the ppb or ppt level. The ability of TeflonTM PFA products to supply ultra-pure fluids and be used as equipment components throughout the semiconductor manufacturing process without impurities is a significant benefit over the more traditional choices for piping, such as copper or stainless steel, which have a significantly higher leaching potential than TeflonTM PFA. Due to TeflonTM PFA's molecular structure, it has the ability to hold its shape at operating temperatures of the applications but is also melt processable. It is resistant to chemicals and corrosion throughout the lifetime of the semiconductor manufacturing process making it the ideal material used for this application. Lithography machines are highly complex and contain over 100,000 different components84. These systems will replicate billions of transistors on the surface of the wafer substrate. In the lithography process the circuit patterns are written on the silicon wafers using a light-sensitive polymer known as a photoresist to develop 3D patterns on the wafer85. During this process, the transfer steps can be repeated more than 30 times to build one circuit, connecting and aligning to previously transferred circuit layers. Within these highly complex systems it is important there is no contamination from equipment components such as particle shedding or leaching of materials onto the wafers as this can cause defects (See Section 4.2.3 for information on defects). 84 https://www.cnbc.com/2021/12/10/asmls-high-na-euv-lithography-machine-is-set-to-transform- chipmaking.html accessed September 2022 85 https://spie.org/publications/fg06_p1-2_semiconductor_lithography?SSO=1 accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 32 Before a new layer is formed, the previous layer will be inspected for defects such as scratches, spin defects, particle contamination, or hot spots86 (see Figure 6-1). There are a wide range of defects that can occur, and some may be undetected until the final stage or after use (for latent defects see Section 4.2.3). Defects can be identified using analysis tools to detect killer and medium sized defects anywhere within the wafer layers87. However, due to node size continuing to decrease the ability to identify and quantify, latent defects on a subatomic level are difficult to identify even with the most powerful analytical tools88. The industry is in the midst of developing methods and tools for these advanced node structures alongside how the process can be kept clean enough to deliver these advanced nodes. The purity, inertness and physical integrity of materials in the manufacturing process helps mitigate and limit defects by eliminating routes of contamination before being introduced into the process. This is the reason fluoropolymers particularly TeflonTM PFA are critical in enabling chip manufacturing. Figure 61: Examples showing defected wafers Source: https://www.cognex.com/industries/electronics/semiconductors/waferdefectinspection accessed September 2022 Semiconductors are manufactured under standards which place demanding requirements on both the wafer and chemical impurity levels (See Section 4.2.1.1). During the wet etching process semiconductor wafers are cleaned, etched, and cleaned again. TeflonTM PFA components are used in this process to ensure that the wash fluids remain free from contamination from the tubing and valves used in the transfer of the wash fluid89. The slightest impurities in the materials and fluids used within manufacturing could incur costly amounts of downtime and damage, while also influencing the production yield of usable chips. 6.1.2 Role of TeflonTM PFA in the semiconductor industry TeflonTM PFA is a key material to achieve contaminant free process chemistries and equipment components and is found in almost every step of processing from packaging, facility infrastructure and manufacturing tools90. Semiconductor wafers are very fragile, meaning the smallest contamination or 86 https://www.cognex.com/industries/electronics/semiconductors/wafer-defect-inspection accessed September 2022 87 https://www.cognex.com/industries/electronics/semiconductors/wafer-defect-inspection accessed September 2022 88 APM personal communication 2022 89 https://www.teflon.com/en/industries-and-solutions/industries/semiconductor-manufacturing/etching accessed June 2022 90 https://www.semiconductors.org/public-statement-of-the-semiconductor-pfas-consortium/ accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 33 particle can damage the entire chip and inhibit the device performance making it unusable91. This section of the report will present a high-level screening of potential alternatives to TeflonTM PFA for use in the semiconductor industry. As mentioned in Section 4.2, the semiconductor manufacturing process is extremely intricate and requires the utmost precision to achieve efficient functionality of each chip yielded. The majority of items a wafer comes in contact with will be made from TeflonTM PFA or other PFAS materials92. 6.1.3 Assessment of alternatives While there has been extensive research into alternatives in the semiconductor industry, a material that can meet all the essential properties mentioned above and provide equal performance to TeflonTM PFA has not been identified. TeflonTM PFA meets the industry standards and provides all required performance characteristics without any additives, softeners, or fillers eliminating additional routes of contamination into the process. Alternative materials making up components must also be FM 491093 certified to be used in clean rooms as wet benches, housing, tanks, piping etc94. The materials/components must meet this standard for fire propagation and smoke generation to avoid possible contamination from fire. Current listed materials that are certified under FM 4910 to be used as cabinets and workstations in clean rooms are: Flame retardant polypropylene; Polyvinyl chloride (PVC) and Chlorinated polyvinyl chloride (CPVC); Polyvinylidene fluoride (PVDF); PFA; and Ethylene chlorotrifluoroethylene (ECTFE)95. The wider group of fluoropolymers for fluid handling that are certified under FM 4910 are fluorinated ethylene propylene (FEP), PFA, PTFE, ethylene tetrafluoroethylene (ETFE), ECTFE, polychlorotrifluoroethylene (PCTFE), and PVDF96. 6.1.3.1 Metals To avoid metal ion contamination and corrosion, the material should ideally be a high-performance plastic and for that reason traditional metal options such as copper, stainless steel, or other metals are ruled out. It is unlikely these metals would meet performance standards for low metallic ion extractable limits in SEMI F57, C90 and the IRDS Yield Enhancement Tables (See Section 4.2.1.1). Stainless steel does not have suitable chemical resistance to withstand the chemicals used during the 91 https://angstromtechnology.com/the-value-of-cleanrooms-for-semiconductor-applications/ accessed September 2022 92 Downstream user consultation 93 FM 4910 is a fire-retardant property standard for materials used in clean room applications. Contamination from a fire could put a chip manufacturer out of business for weeks or even permanently. Materials passing the cleanroom protocol can be listed in the Approval Guide https://www.fmapprovals.com/approval-guide accessed November 2022 94 https://www.curbellplastics.com/Research-Solutions/Industry-Solutions/Markets/Semiconductor-and- Electronics-Manufacturing-Equipm/Wet-Benches-and-Cleanrooms accessed September 2022 95 https://www.curbellplastics.com/Research-Solutions/Industry-Solutions/Markets/Semiconductor-and- Electronics-Manufacturing-Equipm/Wet-Benches-and-Cleanrooms accessed September 2022 96 https://www.curbellplastics.com/Research-Solutions/Industry-Solutions/Markets/Semiconductor-and- Electronics-Manufacturing-Equipm/Wet-Benches-and-Cleanrooms accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 34 semiconductor manufacturing process. Information gathered during consultation, confirmed that steel was investigated and tested as an alternative material but was not suitable in terms of cleanliness and lifetime, due to corrosion and inadequate UV light resistance97. Copper also would not be able to withstand the corrosive chemicals used during the manufacturing process. However, it is common for metals to be used in areas where fluoropolymers do not have the burst pressure requirements that are needed. In these instances, metals are only used when absolutely necessary, and sometimes coated with a liquid PFAS resin98, followed by adequate filtration to ensure contamination of metal ions is low. Noble metals such as gold, platinum and palladium play a vital role in the manufacture of semiconductor chips. They are used in the semiconductor manufacturing process during the evaporation and sputtering processes where they are deposited onto the shield kit. They are favoured here because of their high electrical conductivity, meaning nanograms of gold can be used to make electrical connections between the chip and the lead frame99. However, they are unsuitable for use in the transport of ultra-pure chemistries for semiconductor manufacturing due to their electrically conductive properties. 6.1.3.2 Polypropylene and polyvinyl chloride Other plastics assessed as potential alternatives include polypropylene (PP) and polyvinyl chloride (PVC). These plastics are widely used and available in various applications and industries. However, these materials do not offer the required amount of chemical resistance to be used within the semiconductor manufacturing process although they meet FM 4910 for use in clean rooms. Chemical compatibility charts100,101,102 demonstrate the resistance of plastics and various chemicals used during the semiconductor manufacturing process (See Table 6-2). Additionally, these materials do not hold their shape at the temperatures required to operate semiconductor processes. On its own PVC is hard and brittle with poor heat stability and requires the use of additives known as plasticisers such as phthalates103,104 or other softeners. The addition of these substances can introduce the potential of more contamination with plasticisers known to have migratory qualities potentially leaching into the ultrapure chemistries105. Alternatively, PVC could be chlorinated to make chlorinated polyvinyl chloride (CPVC). This material is resistant to more chemicals than traditional PVC and can withstand higher temperatures, however its migratory qualities and chemical resistance are not suitable for use within semiconductor manufacturing. While polypropylene is known for its mouldable qualities and is a material that is melt processable, it is classed as a thermoplastic and will become liquid at its melting point (130C) 106. This is significantly lower than the operating temperatures (260C) needed for semiconductor manufacturing. 97 Downstream User Consultation 2022 98 Information gathered through consultation 2022 99 https://link.springer.com/content/pdf/10.1007/BF03214833.pdf accessed September 2022 100 https://www.plasticsintl.com/chemical-resistance-chart accessed 2022 101 https://www.graco.com/content/dam/graco/ipd/literature/misc/chemical-compatibility- guide/Graco_ChemCompGuideEN-B.pdf accessed September 2022 102 https://www.polyfluor.nl/en/chemical-resistance/pfa/ accessed September 2022 103 Petersen, R. v. (1976). LEACHABLE COMPONENTS AND BIOCOMPATABILITY OF PVC MEDICAL DEVICES. Mechanisms of Toxicity and Metabolism, 181-190. https://doi.org/10.1016/B978-0-08-020544-1.50024-8 104 https://www.creativemechanisms.com/blog/everything-you-need-to-know-about-pvc-plastic accessed September 2022 105 Erythropel, H. C., Maric, M., Nicell, J. A., Leask, R. L., & Yargeau, V. (2014). Leaching of the plasticizer di(2- ethylhexyl)phthalate (DEHP) from plastic containers and the question of human exposure. Applied Microbiology and Biotechnology, 98(24), 9967-9981. https://doi.org/10.1007/S00253-014-6183-8 accessed September2022 106 https://www.creativemechanisms.com/blog/all-you-need-to-know-about-polypropylene.-part-2 accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 35 Although, not used in the manufacturing process steps that have direct contact with process chemistries or wafers, PVC and PP are still used in the semiconductor industry. Based on information gathered during consultation, PVC is typically used to build the frame or structure of lithography equipment. While PP is used in areas of the process where purity is not a factor, for example piping for waste streams. However, 70-75% of the mass of the lithography machines are made of fluoropolymers (PFA or PTFE). 6.1.3.3 Polyether ether ketone (PEEK) The high-performance polymer known as polyether ether ketone (PEEK) is a commonly used plastic in the aerospace and engineering industries, known for its high mechanical strength and temperature resistance107. Although used in many high-performance applications, it was highlighted in consultation that PEEK use in the semiconductor industry may not be technically feasible due to its absorptive potential of some solvents. These include solvents such as methylene chloride, dimethyl sulfoxide (DMSO), tetrahydrofuran (THF), sulfuric and nitric acid. Additionally, PEEK is prone to "kinking" when bent at a sharp angle for long durations108. The processability of PEEK may also present further challenges in comparison to PFA. The melting point of PEEK (343C) is slightly higher than PFA (300-310C) and will therefore require more energy to process. Information gathered during consultation confirmed the difficulties PEEK would present during component processing. The volume of components and tubing needed would make it very challenging to manufacture. Mechanical testing is carried out to determine the performance of plastics, including tests such as tensile elongation and Izod impact strength, among others. The tensile elongation of PEEK is 50% elongation versus its initial size whilst PFA shows 300% elongation versus initial size at room temperature109. Additionally, PFA is melt processable allowing it to be stretched further and moulded into various sized tubes and components. The Izod impact strength test showed PFA had no breaking point while PEEK showed a break at 1.55 ft*lbs/in (82.8 J/m), this demonstrates improved strength and resistance of PFA in relation to PEEK. Although, PEEK may not be a suitable alternative to transport process chemistries, other components throughout the semiconductor manufacturing process may be able to be made from PEEK but only when absolutely necessary. 6.1.3.4 Overall conclusions of assessed alternatives As seen from the information presented in Table 6-2 and Table 6-3, matching the performance characteristics of PFA is very difficult leading to the conclusion that from the alternatives considered, none of them represent a technically viable replacement to TeflonTM PFA in the semiconductor industry. Consultations with key stakeholders within the semiconductor industry were in agreement of these findings, i.e. stating that PFA is the only material that can meet the stringent standards required within the industry. Throughout the semiconductor manufacturing process hundreds of chemicals are used of varying degrees of corrosivity. The infrastructure of semiconductor chemical transportation systems must be able to withstand these aggressive chemicals without breaking down, absorbing, or reacting for long durations. Presented in Table 6-2 are a few of the chemicals used throughout the process and how the alternatives, presented above, compared to TeflonTM PFA in chemical performance. For example, piranha etch solution made from sulfuric acid and hydrogen peroxide is used to clean residues from the silicon wafers and strip residue while oxidising metals leaving the surface 107 https://omnexus.specialchem.com/selection-guide/polyetheretherketone-peek-thermoplastic September 2022 108 Downstream user consultation 109 https://www.plasticsintl.com/material-property-matrix accessed September 2022 accessed SEA on TeflonTM PFA for Chemours APM RPA| 36 hydrophilic110. This is beneficial for subsequent manufacturing steps. To safely use this chemical mixture, specialised equipment is required to handle and transport it due to the highly corrosive properties of the mixture. While some metals may be resistant to this solution, they could still leach impurities and contaminate it. As such these solutions are contained mostly with fluoropolymers, which show minimal leaching and suitable corrosion resistance. Table 62: Chemical compatibility of materials used in semiconductor manufacturing Chemical Concentration PFA CPVC PEEK Polypropylene PVC % Acetic acid 10 A A A B A aq. Alcohols, A * A B * aliphatic Aqua regia A C * C C Chlorine aq. 10 A A A B A Citric acid 10 A A A A A aq. Detergents, A A A A A organic Fluorine, dry A A D D C Hydrochloric 0.4 A A A A A acid aq. Hydrofluoric 4 A B D A B acid aq. Hydrogen 0.5 A A A A A peroxide aq. Hydrogen 1 A A A A A peroxide aq. Hydrogen 3 A A A B D peroxide aq. Hydrogen SAT A A A A A sulphide aq. Ozone A A A C B Phosphoric 0.3 A A A A A acid aq. Phosphoric 3 A A A A A acid aq. Phosphoric 10 A A A A A acid aq. Potassium 90 A A A A A chloride aq. Sodium 50 A A A B A bicarbonate aq. Sodium A A A A A hypochlorite 15% (chlorine bleach) Stainless Steel B A D D A A D D D B B B A * A A A A A B 110 https://www.modutek.com/how-piranha-etch-is-used-in-silicon-wafer- cleaning/#:~:text=The%20mixture%20heats%20up%20rapidly%20and%20is%20often,the%20temperature %20and%20keep%20the%20etch%20rate%20constant. Accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 37 Table 62: Chemical compatibility of materials used in semiconductor manufacturing Chemical Concentration PFA CPVC PEEK Polypropylene PVC % Sulphuric 2 A A A A A acid aq. Sulphuric 5 A A A A A acid aq. Sulphurous 10 A A A A A acid aq. Urea A A * A A Source: https://www.plasticsintl.com/chemicalresistancechart https://www.polyfluor.nl/en/chemicalresistance/pfa/ https://www.slideshare.net/alexsung1975/chemre https://www.graco.com/content/dam/graco/ipd/literature/misc/chemicalcompatibility guide/Graco_ChemCompGuideENB.pdf accessed September 2022 Compass Publications Chemical Resistance Guide for Plastics, ISBN 1-889712-03-5 * No data available A= No attack green B= Slight attack by absorption, small reduction in mechanical properties amber C= Moderate attack, material will have limited life red D= Material will decompose or dissolve red Stainless Steel D D C A As seen above in Table 6-2, the chemical resistivity of any of the alternative materials is not adequate enough for the use of each of the ultra-pure chemical transportation uses in semiconductor manufacturing. The use of these alternative materials could result in worker exposure or injury if the components become compromised by chemical attack. This could result in leaks or breakages causing chemical spills. There could also be an increase in the rate of component replacement as chemicals use would break down these alternative materials quicker than the current PFA based systems. Table 6-3 highlights how the potential alternatives considered in this assessment perform against the main criteria for consideration in semiconductor manufacturing. These can also be compared against TeflonTM PFA. The table indicates that no alternative material can simultaneously meet all the technical requirements needed to enable semiconductor manufacturing. Table 63: Material TeflonTM PFA Copper Stainless steel Noble metals PEEK Screening materials for use in semiconductor processes Meets Low Low Chemical Corrosion Standard FM 4910 leachability particle sheddin resistant, moisture resistant g resistant Yes Yes Yes Yes Yes Durabilit y, crack resistan ce, tempera ture resistan ce Yes Fire resistant Yes No data No data No data No data Metal ion contaminati on Metal ion contaminati on Metal ion contaminati on Yes No data Eliminated due to leaching potential Eliminated due to leaching potential Eliminated due to leaching potential Okay Yes Okay Yes Processability and weldability Good Poor SEA on TeflonTM PFA for Chemours APM RPA| 38 Table 63: Screening materials for use in semiconductor processes Material PP Meets Standard FM 4910 Yes Low leachability Yes Low particle sheddin g No data Chemical resistant, moisture resistant Okay Corrosion resistant Yes Durabilit y, crack resistan ce, tempera ture resistan ce No(a) PVC/CPVC Yes Yes No data Okay Yes No(b) Source: RPA study team analysis Notes (a) will lose shape at operating temperature (b) will lose shape at operating temperature. Hard and brittle on its own. CPVC better than PVC. Fire resistant Yes Yes Processability and weldability Good Good The remainder of this section will discuss the implications of implementing an alternative, if one were to become available, into the semiconductor industry including the timeline and costs in which it would take to achieve this. Discussed as well will be the risks posed to the industry if an alternative is used that is not suitable. 6.1.3.5 Availability If an alternative material that presents the same performance as TeflonTM PFA became available, the implementation into the manufacturing process would be extremely long, potentially over 40 years before a new process is matured111. Based on information gathered during consultation, the evolution of the current semiconductor industry took 45 years to achieve its current performance level. Any change to the process, including materials, could have significant effects and would need to go through extensive testing to ensure both performance levels have not dropped and also to solve unforeseen problems. The qualification process of a new novel material could take up to 10 years on its own from invention to commercialisation, Figure 6-2 presents the qualification stages to integrate any change into the manufacturing process. Once a material has been identified to be suitable for use in the manufacturing process, it then needs to be demonstrated to users (fabrication plants) that it would not damage or decrease the performance of their products. The construction of new modules using an alternative material would need recertification and due to the complexity of the manufacturing machine, its redesign could take up to 20 years, including safety testing and meeting qualification standards112. 111 Downstream user consultation 112 Downstream user consultation SEA on TeflonTM PFA for Chemours APM RPA| 39 Figure 62: Qualification stages to integrate changes into existing manufacturing process Source: Downstream user consultation Semiconductor technology advancements have driven the innovation of ultra-pure materials used in the sector, with chip fabricators demonstrating the needs of production equipment to OEMs in order to achieve chip performance standards113. The projection shown in Moore's Law114, that the number of transistors will double every two years, has put pressure on the industry to continuously improve and scale down this technology. As well as the push for the development of artificial intelligence, driving the production of micro sized chips also means an evolution of materials used is needed115. However, as stated in the previous section these types of materials are limited and the properties and characteristics are largely filled by TeflonTM PFA or other PFAS. Currently there are no available alternatives to replace TeflonTM PFA in the semiconductor process, and as there has not been a need to replace it the development and readiness of any such non-PFAS material is far from reaching market availability. 6.1.3.6 Risks associated with incorporating new materials The implementation of an alternative material, if one were found, would take a significant amount of time. This is due to the process that is in place to ensure the purity levels, and hence the quality of semiconductor chips, are maintained and continue to meet present standards. The implementation of a new material into the process would require extensive time to incorporate into the process and undergo testing. Any materials that do not allow the same level of purity would potentially affect the percentage yield of chips and introduce costly or fatal defects. Similarly, the present density of components on current generation chips could not be achieved. If more impurities are present, that leads to the risk of introducing defects onto the wafer structure inhibiting the performance of the chip. This could lead to latent defects in the chip, impacting the function of the final product, potentially putting consumers at risk. Additionally, transistors need to 113 https://www.eeworldonline.com/semiconductor-manufacturing-past-present-and-future/ accessed September 2022 114 https://www.synopsys.com/glossary/what-is-moores-law.html accessed September 2022 115 https://www.eeworldonline.com/semiconductor-manufacturing-past-present-and-future/ accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 40 be replicated extensively and the materials used have a direct impact on replicability to ensure there are no defects that would compromise the functionality of a wafer116. Fabrication plants and OEM equipment manufacturers are driving the process and developing how they make their products. In order to phase out fluoropolymers, or more specially Teflon PFA, they would need to change the chemistries that are being used. This would be a huge undertaking and could require complete redesign of fabrication plants. The implementation of a new material in the manufacturing process of semiconductor chips could cease production for decades due to the qualification processes needed, as previously discussed. As there is already a supply chain issue affecting the volume of chips produced117, an additional hurdle could ultimately lead to electronic device shortages, such as smartphones, cameras, computers, medical devices and automobiles causing as these industries to become reliant on importation of chips from other continents. 6.1.3.7 Development and implementation costs PFAS materials are among some of the most expensive plastics that can be used, therefore the costs associated with a switch to a non-PFAS alternative could likely be absorbed by manufacturers. According to Plastics Europe, the average cost of fluoropolymers produced in the EU in July 2022 was 21,000 per ton vs 2,200 per ton for PVC. This figure demonstrates how costly PFAS materials are in comparison to other plastics. It can be inferred that if the industry could switch to a cheaper viable alternative, it would likely have done so. The costs to develop, qualify and implement materials would be a large initial investment. The total cost would be hard to predict as this has not been done before, however, it can be assumed that research and development of materials would be extremely costly. As well as demonstrating its performance through testing, such as leach out testing and corrosion resistance. 6.1.4 Conclusions The development of the semiconductor chip has made significant advances since the 1970s and over the last 40 to 50 years, chips have become an integral part of everyday life found in almost every sector118. With these technology advancements the use of ultra-pure materials has become significantly more important. Therefore, it can be recognised that production of semiconductor chips is enabled by the materials used to produce manufacturing infrastructure such as tubing, valves and other components. With currently no viable alternatives to simultaneously deliver the performance requirements equivalent to TeflonTM PFA, a PFAS restriction on impacting fluoropolymers such as TeflonTM PFA in Europe would have immediate and significant long-lasting effects on the European semiconductor manufacturing industry. In addition, knock-on effects would be felt throughout numerous other industries reliant on semiconductor technology. Without TeflonTM PFA the European semiconductor industry would likely collapse, immediately making almost every sector reliant on importation of semiconductor chips from Asia and North America. Europe would lose its 10% global semiconductor chip market share and consequently fail to fulfil the objectives in the EU Chips Act. For a full picture on the associated European profit and employment losses please refer to Section 8. 116 https://www.ibm.com/thought-leadership/innovation-explanations/mukesh-khare-on-smaller-transistors- analytics accessed September 2022 117 https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage accessed September 2022 118 https://www.hitachi-hightech.com/global/products/device/semiconductor/history.html accessed June 2022 SEA on TeflonTM PFA for Chemours APM RPA| 41 The performance requirements for materials, which are all met by TeflonTM PFA, is what makes the switch to another material so difficult. These extremely rigid standards must be met by any potential alternative to maintain the current performance levels. Metal alternatives risk the potential for metallic impurities and contaminants to be introduced into the process that could result in wafer defects. While other plastic alternatives could also leach impurities into the ultra-pure chemicals. Additionally, both alternative options (metals and plastics) do not have the chemical resistance needed for the application. This reduced chemical resistance could result in injury or increased component turnover leading to downtime, increased waste, and higher expense. In the event that an alternative material is found to meet the performance characteristics required to be used within this industry, it would take decades to redesign, qualify, and implement the material into the manufacturing process. This would therefore not be economically viable and would have huge knock-on effects to industries that rely on semiconductor chip technology. While there continues to be research and innovation to improve semiconductor processes using current materials, there are no advancements in the discovery of a material that meets the performance requirements of fluoropolymers and more specifically, TeflonTM PFA. Therefore, this analysis of alternatives finds that there are currently no viable alternatives to the use of TeflonTM PFA in the semiconductor industry. SEA on TeflonTM PFA for Chemours APM RPA| 42 7 Continued use scenario 7.1 Introduction This section sets out the continued use (or baseline) scenario for the Advanced Performance Materials (APM) division of Chemours and its downstream users in relation to the manufacture, export, import, sale, and use of TeflonTM PFA. The scenario assumes that APM will be able to import, manufacture, place on the market and use TeflonTM PFA without any restriction. It also assumes that all downstream users will be able to purchase and use TeflonTM PFA products offered by APM and these same downstream users will be able to manufacture finished articles that are either partly or wholly composed of fluoropolymers or use fluoropolymers during their respective manufacturing processes. The continued use scenario will focus on the current import of the products TeflonTM PFA. Specifically, this socio-economic analysis will focus on the import of TeflonTM PFA used in components to convey process chemistries and components for wafer handling during the manufacture of semiconductors. Reference and extrapolation to other applications within the semiconductor markets are also made at a higher level. Chemours already holds a strong position in the supply chain of this product within Europe, meaning they possess significant market share. This market is expected to adapt and change significantly in response to global pressures, but APM intend to retain their market capitalisation. Alongside use specific information for APM this section will also present wider market and supply chain information for the various players and sectors for the above stated uses of Chemours APMs products. 7.2 Imports and profits This section presents various economic indicators for Chemours APM business division. The indicators discussed are the import tonnes of TeflonTM PFA, the size of these import markets in terms of the revenue earned from their import and the profits generated from the sale of these materials for the uses described above. The RPA study team has extrapolated data by using reported 2021 import and sales data from Chemours APM to predict the import, sales, and profits of the business division up to and including the end of 2035. The data has been extracted from surveys created by RPA and answered by Chemours APM. The RPA study team has presented tonnage, value, and profit figures from 2021-2035 to demonstrate how each market will develop between now and the possible start of a restriction. However, only the figures from 2026-2035 are considered and discussed within the analysis of the continued use scenario. The assessment period being employed for this continued use scenario is from 2026-2035, which considers the expected time the restriction will be in place as well as a phase-out period. The timeline will be in the non-use scenario, as discussed in more detail in section 8. This assessment period (ten years) reflects a possible timeframe for alternatives and new chemicals to be identified in the event fluorine-based chemicals can no longer be utilised; however, it is expected that the full development and implementation of new materials, chemistries, technologies and techniques within the semiconductor industry could take in excess of 40 years. However, a more detailed explanation for the reasoning behind the 2026-2035 timeframe is provided in Section 8.1. It should be noted that the following report sections will refer to Chemours TeflonTM PFA product name and not the monomers used to create them. 7.2.1 TeflonTM PFA imports and profits TeflonTM PFA is produced and sold in various grades of purity by Chemours APM for use in various sectors, however it is the material of choice for use within the fluid handling/chemical distribution SEA on TeflonTM PFA for Chemours APM RPA| 43 process during the manufacture of semiconductors. At present Chemours APM does not polymerise or manufacture TeflonTM PFA and its resins within the EU27/EEA and instead imports this material to supply the various markets dependent on this fluoropolymer. In 2021 between 250 and 300 tonnes of TeflonTM PFA in total were imported into the EU27/EEA for both semiconductor related uses and other uses. The global growth in demand for TeflonTM PFA is increasing at a rate of roughly 8%, however, Europe is currently seeing its demand for the material increase at a higher annual rate of 12%119. This increased level of demand is the result of large amounts of investment set to occur within industries dependent on TeflonTM PFA, such as the semiconductor industry which between 2019 and 2021 is estimated to have invested $53 billion and $235 billion global on new foundries and equipment respectively120. A detailed explanation as to the reasons why demand for TeflonTM PFA is increasing in the semiconductor industry is provided below following the split between semiconductor TeflonTM PFA uses, and other uses being presented. Using this baseline figure and annual growth rate the RPA study team have extrapolated the total tonnes of TeflonTM PFA which will be imported into the EU27/EEA from 2021-2035 and these estimates are presented in Table 7-1. Table 71: Estimated total tonnes of TeflonTM PFA imported into the EU27/EEA Year Lower bound (tonnes) Upper bound (tonnes) 2021 250 2022 280 2023 314 2024 351 2025 393 2026 441 2027 493 2028 553 2029 619 2030 693 2031 776 2032 870 2033 974 2034 1,091 2035 1,222 Assessment period total 7,732 Grand total 9,320 Source: RPA study team analysis 300 336 376 421 472 529 592 663 743 832 932 1,044 1,169 1,309 1,466 9,278 11,184 As can be seen from the above the current quantities of TeflonTM PFA being imported into Europe by 2035 are set to increase fivefold compared to 2021. Total imports will rise from between 250 and 300 tonnes in 2021 to between just over 1200 and just under 1500 tonnes in 2035, representing a rapidly growing market in the short and long term. Over the course of the assessment period from 2026- 2035 a total of between 7700 and 9300 tonnes will be imported into the EU27/EEA. Presented in Table 7-2 is the split between semiconductor related uses of TeflonTM PFA and other industrial uses as provided to the RPA study team by APM during consultation. Of the total annual tonnes of TeflonTM PFA (250 to 300 tonnes) imported in 2021, between 100 and 150 tonnes was imported specifically for use within the semiconductor industry. Therefore, making it the single biggest market to use TeflonTM PFA imported by Chemours APM. 119 Source: internal communication between APM and RPA and APM questionnaire response 120 SEMI West 2022 Day 1 SEMI Market Symposium. Agenda can be found here: https://www.semiconwest.org/programs/market-symposium SEA on TeflonTM PFA for Chemours APM RPA| 44 Table 72: Estimated tonnes of TeflonTM PFA imported into the EU27/EEA by use PFA used in semiconductor industry Year Lower bound (tonnes) Upper bound (tonnes) 2021 100 150 2022 112 168 2023 125 188 2024 140 211 2025 157 236 2026 176 264 2027 197 296 2028 221 332 2029 248 371 2030 277 416 2031 311 466 2032 348 522 2033 390 584 2034 436 655 2035 489 733 Assessment period total 3,093 4,639 Grand total 3,728 5,592 Source: RPA study team analysis Other PFA uses (tonnes) 150 168 188 211 236 264 296 332 371 416 466 522 584 655 733 4,639 5,592 Over the course of the assessment period, between 3000 and 4700 tonnes of TeflonTM PFA will be imported into the EU27/EEA for use within the semiconductor industry in the fluid handling/chemical distribution process. Likewise, nearly 4700 tonnes of TeflonTM PFA will be imported for use in other industrial settings. The reason the demand for TeflonTM PFA for use within the semiconductor industry is set to increase, is due to the continued global push on demand from the semiconductor industry. The global pressure being placed on the demand for TeflonTM PFA from the semiconductor industry is arising from two requirements: Firstly, there is a continuing upward trend in the demand for semiconductors; with more and more industries introducing technology to their products the demand for semiconductor chips to enable this will continue to grow rapidly. Prior to the COVID-19 pandemic there was already a global chip shortage developing. Exacerbated by the pandemic, this shortage to hit extreme levels causing it to have a profound impact on the output of other critical industries such as consumer electronics, automobiles, defence, and internet infrastructure. The global shortage is causing an exponential increase in the capacity of the semiconductor industry. Substantial levels of investment, worth an estimated 100 billion dollars over the next two years, are being made in both the North America and European regions as manufacturing diversifies away from sole reliance on Asia based manufacturing. Therefore, the already present demand for more chips and the expanding capacity of the industry is creating a compounded increase in the demand for TeflonTM PFA as the semiconductor industry expands to meet the global demand being caused by both consumer and political pressures such as the European Chips Act. Secondly to this is the global requirement for more advanced chips on a regular basis. For a semiconductor chip to become more advanced it must possess greater compute power which in turn requires more transistors. The semiconductor industry from 1965 to 1975 doubled the number of transistors on chips every year and since 1975 has followed what has become known as Moore's Law whereby the number of transistors on a semiconductor chip doubles every two years121. Adhering to this law is becoming more and more difficult due to complexities in further reducing the size of 121 https://www.britannica.com/technology/Moores-law accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 45 transistors (to allow more to be placed onto a chip) and accurately replicating transistors many billions of times over. To continue to reduce the size of transistors and upgrade the quality of semiconductors, exceptionally clean and sterile environments are required and to achieve this very high purity and, non-reactive materials are required in the manufacturing process. Therefore TeflonTM PFA is the material of choice for the semiconductor industry. New high purity grades of TeflonTM PFA being introduced to market will allow the semiconductor industry to continue this process of improvement and thus is a second reason the demand for TeflonTM PFA is set to greatly increase over the course of the assessment period. Even though only a few thousand tonnes of TeflonTM PFA is set to be imported over the course of the assessment period the size of the market these materials supply is substantial given their very high market price. Chemours APM sell TeflonTM PFA resins for between 40,000 and 80,000 per tonne. Using these sale prices, the RPA study team has estimated the value of the market these imports supply. This was done by multiplying the 2021 tonnages by the aforementioned sale prices to establish the base revenue and then growing the revenue streams by a 20% annual growth rate, being experienced by Chemours for their TeflonTM PFA products. These estimates are presented in Table 7-3. Table 73: Estimated revenue from the sale of TeflonTM PFA imports by use Semiconductor use Other uses Year Lower bound () Upper bound () Lower bound () 2021 4,000,000 12,000,000 6,000,000 2022 4,620,000 13,800,000 6,920,000 2023 5,330,000 16,000,000 7,990,000 2024 6,140,000 18,400,000 9,200,000 2025 7,090,000 21,300,000 10,600,000 2026 8,180,000 24,500,000 12,300,000 2027 9,400,000 28,300,000 14,200,000 2028 10,900,000 32,700,000 16,300,000 2029 12,600,000 37,700,000 18,900,000 2030 14,500,000 43,500,000 21,800,000 2031 16,700,000 50,200,000 25,100,000 2032 19,300,000 57,900,000 29,000,000 2033 22,300,000 67,000,000 33,400,000 2034 25,700,000 77,000,000 38,600,000 2035 29,700,000 89,000,000 44,500,000 Assessment period total 169,280,000 507,800,000 254,100,000 Grand total 196,460,000 589,300,000 294,810,000 Source: RPA study team analysis Upper bound () 12,000,000 13,800,000 16,000,000 18,400,000 21,300,000 24,500,000 28,300,000 32,700,000 37,700,000 43,500,000 50,200,000 57,900,000 67,000,000 77,000,000 89,000,000 507,800,000 589,300,000 It can be seen here again that the value of the market for TeflonTM PFA used in the semiconductor industry is substantial, but so too is the value of the TeflonTM PFA used for other industrial uses. The value of TeflonTM PFA over the assessment period used within the semiconductor industry is between 169 and 508 million, with the value of sales of TeflonTM PFA for other uses standing between 124 and 249 million. Relatively small annual quantities of material are therefore producing extremely valuable markets and these quantities of TeflonTM PFA are also enabling even more high value markets to exist along the downstream supply chain for semiconductors, which is discussed and valued in more detail in Section 7.4. The combined value of the above tables is presented in Table 7-4. Table 74: Estimated total revenue from the sale of TeflonTM PFA imports Year Lower bound () Upper bound () 2021 10,000,000 2022 11,500,000 24,000,000 27,700,000 SEA on TeflonTM PFA for Chemours APM RPA| 46 Table 74: Estimated total revenue from the sale of TeflonTM PFA imports Year Lower bound () Upper bound () 2023 13,300,000 2024 15,400,000 2025 17,700,000 2026 20,500,000 2027 23,600,000 2028 27,200,000 2029 31,400,000 2030 36,300,000 2031 41,800,000 2032 48,300,000 2033 55,700,000 2034 64,000,000 2035 74,000,000 Assessment period total 422,800,000 Grand total 490,700,000 Source: RPA study team analysis 32,000,000 36,900,000 42,500,000 49,100,000 56,600,000 65,400,000 75,000,000 87,000,000 100,000,000 116,000,000 134,000,000 154,000,000 178,000,000 1,015,100,000 1,178,200,000 The import of TeflonTM PFA therefore supplies a market within Europe that will be valued at between 422 million and 1.02 billion over the assessment period based on revenue of the product. While these products may ultimately be imported their value and importance in the supply chain of semiconductors cannot be underestimated and this element of criticality compensates substantially against the impact of importing into the EU/EEA. At the same time, however, the sale of these products takes place within the EU/EEA meaning that substantial profits are generated within the region allowing significant amounts of value and economic growth to be experienced by the wider European economy. For the sale of TeflonTM PFA, Chemours APM is experiencing a substantial variability in profit margin due to efficiencies they have developed during their research and development and due to the high selling price of this proprietary material. The margin between 2021 and 2026 is set to increase further as additional economies of scale and efficient business practices are implemented and realised. The exact value of this variable margin cannot be disclosed for reasons of confidentiality. The Table 7-5 and Table 7-6 provide the estimated annual profits that will be generated by Chemours APM. These estimates were arrived at by applying the increasing variable profit margin to the above revenue figures for 2021-2026 and from 2026 onwards the higher margin range has been applied to the revenue figures found above for TeflonTM PFA. All the figures above and below have been rounded to three significant figures and therefore there is the possibility for slight discrepancies between the figures, but these are minimal and simply a result of the presentation of rounded figures. Table 75: Estimated profits from the sale of TeflonTM PFA by use Semiconductor use Year Lower bound () Upper bound () 2021 2,480,000 7,440,000 2022 2,930,000 8,790,000 2023 3,460,000 10,400,000 2024 4,090,000 12,300,000 2025 4,820,000 14,500,000 2026 5,690,000 17,100,000 2027 6,560,000 19,700,000 2028 7,570,000 22,700,000 2029 8,730,000 26,200,000 2030 10,100,000 30,200,000 Other uses Lower bound () 3,720,000 4,400,000 5,190,000 6,130,000 7,230,000 8,530,000 9,840,000 11,400,000 13,100,000 15,100,000 Upper bound () 7,440,000 8,790,000 10,400,000 12,300,000 14,500,000 17,100,000 19,700,000 22,700,000 26,200,000 30,200,000 SEA on TeflonTM PFA for Chemours APM RPA| 47 Table 75: Estimated profits from the sale of TeflonTM PFA by use Semiconductor use Year Lower bound () Upper bound () 2031 11,600,000 34,900,000 2032 13,400,000 40,300,000 2033 15,500,000 46,400,000 2034 17,900,000 53,600,000 2035 20,600,000 61,800,000 Assessment period total 117,650,000 352,900,000 Grand total 135,430,000 406,330,000 Source: RPA study team analysis Estimations are excluding fixed cost Other uses Lower bound () 17,400,000 20,100,000 23,200,000 26,800,000 30,900,000 176,370,000 203,040,000 Upper bound () 34,900,000 40,300,000 46,400,000 53,600,000 61,800,000 352,900,000 406,330,000 TeflonTM PFA used in the semiconductor industry is the largest single application for PFA sold by Chemours APM this also results in the profits attributable to this application being substantial. The profits generated by the sale of TeflonTM PFA for use in this industry are between 117 and 353 million over the course of the assessment period, representing up to 50% of the total profits generated per year. Likewise, the profit generated from the sale of TeflonTM PFA for other uses over the assessment period stands between 176 and 353 million. The generation of profits on this scale from the supply of relatively small quantities of material underpin the value and vitality of these products to this supply chain. While it is recognised by the supply chain that fluoropolymers of this high purity nature are particularly expensive, they do allow significant profits to be generated by Chemours APM but also by the whole supply chain given the value of the industries these materials are utilised in which are further discussed in Section 7.4. Table 76: Estimated total profits from the sale of TeflonTM PFA Year Lower bound () 2021 6,200,000 2022 7,330,000 2023 8,650,000 2024 10,200,000 2025 12,100,000 2026 14,200,000 2027 16,400,000 2028 18,900,000 2029 21,800,000 2030 25,200,000 2031 29,100,000 2032 33,500,000 2033 38,700,000 2034 44,700,000 2035 51,500,000 Assessment period total 294,000,000 Grand total 338,480,000 Source: RPA study team analysis Estimations are excluding fixed cost Upper bound () 14,900,000 17,600,000 20,800,000 24,500,000 28,900,000 34,100,000 39,400,000 45,400,000 52,400,000 60,500,000 69,800,000 80,500,000 92,900,000 107,000,000 124,000,000 706,000,000 812,700,000 Overall, the total estimated profits generated by Chemours APM from the sale of TeflonTM PFA over the course of the assessment period is between 294 and 706 million. It should again be noted that the assessment period is the sum of only years 2026-2035 and the grand total is the sum of all years in the above table from 2021-2035. These profit levels are substantial for Europe to benefit from as these profits in the range of hundreds of millions of Euros allow for significant tax revenues to be enjoyed by Member State governments and for substantial levels of investment, research, and SEA on TeflonTM PFA for Chemours APM RPA| 48 development to take place within Europe. Also given the current volatility in the semiconductor industry given current global shortages and rapid push for capacity increases could cause these estimations to be underestimates. If current demand for semiconductors and breakthroughs in semiconductor transistor size develop, there could be an even higher level of demand for production capacity and requirement for machines using TeflonTM PFA. Not only that but given the permanent place semiconductors have in the world there is also a high level of guarantee regarding the recurrence of these profits for the European economy. Semiconductors will be required in many industries from now onwards as technology develops and as such more material will be required to produce these semiconductors and therefore sales of TeflonTM PFA and other fluoropolymer materials which facilitate this will continue indefinitely. At the same time, given the levels of future investment the semiconductor industry is potentially set to make within Europe, will only be possible provided materials such as TeflonTM PFA are available within the continent. Therefore, on top of the profits which Chemours APM are generating from the European economy, Chemours APM supply of TeflonTM PFA is also exclusively allowing Europe to remain in contention to receive tens of billions of Euros of investment in new high skill jobs and production capacity. 7.3 Emissions The inherent nature of fluoropolymers means they are not likely to release emissions due to their stability and inertness. Emissions may occur during processing and melting, however, emissions during use and end-of-life are not likely to occur. The large molecular weight of the fluoropolymers means it is unlikely to cross biological membranes. In addition, TeflonTM PFA is insoluble in water therefore there is no potential of toxicity to aquatic organisms. This section will look at emissions during the lifecycle of the product and what can be done to reduce emissions. 7.3.1 Emissions at the Dordrecht site There are no emissions related to the manufacture of TeflonTM PFA at the Dordrecht site. See Section 3.1.1 for information on emissions abatement at Chemours' Dordrecht site and European facilities. The investments Chemours has made is recognised by Dutch authorities who concluded "no health risk is expected for people living in the vicinity of the Chemours Dordrecht plant due to exposure"122. The additional measures being implemented to achieve their CRC 2030 goals will continue to lower emissions and exposure even further. 7.3.2 Lifecycle emissions of Perfluoro alkoxy The potential for emissions is likely to occur during the manufacturing phase of the articles, i.e., during melting of the resins. According to one downstream user, the moulding and converting process takes place entirely within a closed system and releases of the material do not occur. The high value of the product is also an incentive to ensure that there is no waste. As previously mentioned in Section 5.1, the residual monomer and polymerisation aid content for PFA are extremely low. This can be attributed to final processing steps implemented by manufacturers, 122 National Institute for Public Health and the Environment, Ministry of Health, Welfare and Sport, Evaluation of substances used in the GenX technology by Chemours, Dordrecht, 2016. SEA on TeflonTM PFA for Chemours APM RPA| 49 such as washing and heating. These steps allow for the removal of residuals from the final commercial product123. The inert, resistant and insoluble nature of the polymer suggests emissions through chemical leaching are also not likely. Therefore, emissions of TeflonTM PFA during use are considered to be unlikely and have not been calculated. 7.3.3 Waste management and end of life At the end of use, fluoropolymers could be disposed of in the following manners: landfill, incineration, or reuse/recycling. 7.3.3.1 Recycling It is possible to recycle PFA to be used in lower grade applications (that do not require the high degree of purity that semiconductors need). As indicated by downstream users, moulders and converters may have their own in-house recycling programs. For example, the melt cakes used in process start- ups can be sold to a recycling company where it will then be ground down and re-granulated for use in low grade applications. Additionally, there may be PFA granules from tubing off-cuts. Users will have grinders and closed loop systems dedicated for PFA; this ensures there will be low PFA waste. Due to the long lifetime of TeflonTM PFA there is only small volumes of waste coming out of fabrication plants and in some cases these components will be reused in lower grade applications, or where possible, in some fabrication equipment. 7.3.3.2 Incineration The most commonly used method of disposal for TeflonTM PFA is incineration. At high enough temperatures set out in the Industrial Emissions Directive 2010/75/EU of at least 850C-1100C for at least two seconds, the C-F bond will be broken destroying the fluoropolymers and any residual fluoropolymers and substances that may form during thermal decomposition. In Europe, typically 80% of fluoropolymers are sent to incineration124. 7.3.3.3 Landfill Fluoropolymers are extremely stable and will not degrade in the environment or release hazardous substances. Due to the properties presented in Section 5, it can be inferred that fluoropolymers sent to landfill will not break down or transform and will remain in a landfill unless otherwise removed, owing to their persistency. Additionally, landfills in Europe are required to be lined with HDPE thus reducing the potential for seepage into the local environment. 124 https://fluoropolymers.plasticseurope.org/application/files/5416/5104/8333/20211104_FP_RMOA_Final_ 3.pdf accessed November 2022 124 https://fluoropolymers.plasticseurope.org/application/files/5416/5104/8333/20211104_FP_RMOA_Final_ 3.pdf accessed November 2022 SEA on TeflonTM PFA for Chemours APM RPA| 50 The structures built with the use of PFA in the semiconductor industry are expected to be in place for decades, and according to desk-based research, no structures in Europe are known to have been dismantled and sent to landfill. 7.4 Value of downstream markets 7.4.1 Semiconductors In 2021 the global semiconductor market was 448.93 billion with a compound annual growth rate (CAGR) of 9.2% through 2029125. In 2019, however, due to the global Covid-19 pandemic, the industry suffered a decline in the market of 6.8% in 2020 compared to 2019126. The main driving factors in this growth is due to rising disposable income and the consumption of consumer electronics and the shift to home-based working during the pandemic has led to increased demand for personal computers127. More specifically, in 2020 the global automotive semiconductor market was worth 37.71 billion with CAGR of 11.8% through 2030128. It was observed that the demand for automotive semiconductor chips has increased by 50% since 2017 and is expected to continue increasing over the coming years129. The driving factors attributing to the growth in this sector is the electrification of vehicles and the increase in advanced driver assistance systems technologies130. In 2021, the global high-performance fluoropolymers market was valued at 3.67 billion and is expected to grow at a CAGR of 6.8% through 2026131. While PTFE dominated the market in 2020, PFA is expected to be the fastest growing fluoropolymer during this period132. The driving factors behind this growth vary depending on the sector. For example, lower emissions and increased fuel efficiency are driving factors in the automotive industry. The aerospace industry relies on their combined physiochemical properties to deliver the functionality needed. More specifically, Chemours TeflonTM PFA holds a 60% global market share and 34% European market share133. As seen in Figure 4-7 earlier, the semiconductor supply chain for semiconductor manufacturing after Chemours APM consists of three main market segments, moulders and converters, equipment manufacturers and fabrication plant owners. To value the entire downstream supply chain the RPA study team has evaluated and consulted with actors in each of these segments to determine an estimate for the value of these markets in terms of profits, employment, environmental and health impacts and innovation and investments. 7.4.1.1 Moulders and converters using TeflonTM PFA Within the semiconductor supply chain, moulders and converters are responsible for manufacturing pipes, tubing and other components that will be used to manufacture equipment vital to the semiconductor manufacturing process. These companies are direct customers of Chemours APM and receive the TeflonTM PFA in its resin form. However, it is the semiconductor fabrication plants that dictate purity requirements. These players further down the supply chain will ask moulders and 125 https://www.fortunebusinessinsights.com/semiconductor-market-102365 accessed July 2022 126 https://www.fortunebusinessinsights.com/semiconductor-market-102365 accessed July 2022 127 https://www.fortunebusinessinsights.com/semiconductor-market-102365 accessed July 2022 128 https://www.alliedmarketresearch.com/automotive-semiconductor-market-A14477 accessed July 2022 129 https://www.eetimes.eu/a-look-at-the-european-semiconductor-industry/ accessed July 2022 130 https://www.alliedmarketresearch.com/automotive-semiconductor-market-A14477 accessed July 2022 131 https://www.marketsandmarkets.com/Market-Reports/fluor-polymer-market-497.html accessed July 2022 132 https://www.marketsandmarkets.com/Market-Reports/fluor-polymer-market-497.html accessed July 2022 133 Internal Communication with Chemours APM Division 2022 SEA on TeflonTM PFA for Chemours APM RPA| 51 converters to prove the purity of their components, which can sometimes be done in house or is negotiated with the raw material supplier. Modern day semiconductor manufacturing has become so advanced and sophisticated that exceptionally pure and non-reactive materials are essential to enable continued advancements in semiconductor processing power and design as previously discussed which is why this industry is demanding only materials such as PFA and other fluoropolymer materials from moulders and converters. In short to meet the demands of their clients, moulders and converters must use PFA and other fluoropolymer materials. During the consultation phase RPA received five responses from moulders and converters within the supply chain and within the EU. Estimations regarding the size of the market these respondents possessed were not possible and as such no wider market predictions or extrapolations regarding the TeflonTM PFA specific moulders and converters market have been made. The information presented below is therefore based solely on the responses RPA received, and these are presented as a minimum possible value estimation for the market. One company provided insufficient data in their response and was therefore not included in the below data amalgamation. Therefore, it can be assumed that the following figures will be a considerable underestimation of the true value of this supply chain segment. Table 7-7 presents the lower and upper bound estimates for the volume of TeflonTM PFA used by European moulders and converters to produce components for use in semiconductor manufacturing processes, based on the information obtained during consultation. To protect the identity of the RPA consultation respondents the information for each responding company has been processed separately and then amalgamated together into a single total in a range and presented as such below. Table 77: Estimated volume of TeflonTM PFA used by moulders and converters in Europe in tonnes Year Lower bound (tonnes) Upper bound (tonnes) 2021 135 2022 151 2023 168 2024 184 2025 201 2026 217 2027 234 2028 250 2029 266 2030 283 2031 299 2032 316 2033 332 2034 349 2035 365 Assessment period total 2,910 Grand total 3,750 Source: RPA study team analysis 165 185 205 225 245 265 285 305 326 346 366 386 406 426 446 3,557 4,583 The moulders and converters who responded to the RPA consultation will, over the course of the assessment period, supply between 2,900 and 3,500 tonnes of TeflonTM PFA components for use in semiconductor manufacturing equipment. The maximum potential size of the market will be limited to the maximum volume of TeflonTM PFA Chemours can import into the European Union, which has been estimated in previous sections and outlined in Table 7-1 and this assumption can be made due SEA on TeflonTM PFA for Chemours APM RPA| 52 to moulders and converters producing very little waste and few off cuts of PFA due to its high price point and cost for these companies. The respondents to the RPA consultation had varying price ranges for their TeflonTM PFA products. These price ranges will not be disclosed for reasons of confidentiality and competition. Table 7-8 are the lower bound and upper bound estimates of revenue for the respondents to the RPA consultation. These revenue estimates were provided to RPA by each respondent respectively in their consultation questionnaires. From 2023 onwards they have been discounted at the rate of 4% to arrive at the present-day value. All individual company values were rounded to 3 significant figures before being amalgamated and presented in Table 7-8 which is why each row itself is not rounded to a set number of significant figures, the difference between the true and rounded figures below is also very low. Table 78: Estimated revenue from sales of TeflonTM PFA equipment components for semiconductor manufacturing Year Lower bound () Upper bound () 2021 96,750,000 118,250,000 2022 109,650,000 134,000,000 2023 119,720,000 146,300,000 2024 130,900,000 159,920,000 2025 143,400,000 175,270,000 2026 157,320,000 192,240,000 2027 172,870,000 211,340,000 2028 190,440,000 232,770,000 2029 210,240,000 257,040,000 2030 232,570,000 283,840,000 2031 257,240,000 313,790,000 2032 285,340,000 348,690,000 2033 316,890,000 387,830,000 2034 353,990,000 432,140,000 2035 394,840,000 481,710,000 Assessment period total 2,571,740,000 3,141,390,000 Grand total 3,172,160,000 3,875,130,000 Source: RPA study team analysis During the assessment period, the four consultation responses received by RPA will generate between 2.5 and 3.2 billion in revenue. The above estimate is a highly conservative under estimation of the true value of revenue being generated by the moulders and converters supply chain segment. It can be concluded however that this portion of the supply chain generates large returns for the European economy in terms of revenue given the substantial sums being generated by only a handful of companies within the supply chain segment. Total economic contribution to the European economy is however measured by profitability and not revenue generation. Respondents were asked to provide their profit margin in a 10% range (e.g., 0-10%, 11-20% etc.) to which the midpoint of those ranges was applied to those companies' revenues. In cases where a respondent had not provided a profit range for confidentiality reasons the RPA study team applied the Member State specific average operating profit metric from Eurostat for NACE classification C22.21. Table 7-9 presents the calculated combined profit generated by the known moulders and converters within Europe. Table 79: Estimated profit from sales of TeflonTM PFA Year Lower bound () 2021 2022 2023 9,232,000 10,494,000 11,484,000 Upper bound () 11,283,000 12,819,000 14,040,000 SEA on TeflonTM PFA for Chemours APM RPA| 53 Table 79: Estimated profit from sales of TeflonTM PFA Year Lower bound () 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Assessment period total Grand total Source: RPA study team analysis 12,589,000 13,830,000 15,208,000 16,763,000 18,516,000 20,497,000 22,730,000 25,200,000 28,020,000 31,190,000 34,910,000 38,980,000 252,014,000 309,643,000 Upper bound () 15,388,000 16,902,000 18,595,000 20,497,000 22,640,000 25,060,000 27,730,000 30,760,000 34,230,000 38,180,000 42,570,000 47,610,000 307,872,000 378,304,000 The contacted moulders and converters within Europe supplying TeflonTM PFA components for use in semiconductor wet processing equipment will contribute profits between 252 and 308 million over the assessment period. Given the limited data used to calculate these profits and there still being a sizeable return to the economy, it can be concluded this segment of the supply chain has a significant impact on the European economy and will bring substantial value and benefits to Europe both strategically and financially under the continued use scenario. 7.4.1.2 Wet processing equipment containing TeflonTM PFA components Wet processing equipment manufacturers have an important role in the semiconductor supply chain but are not direct customers of Chemours. These businesses utilise pipes, tubes, valves, and other components made from TeflonTM PFA, and other fluoropolymer materials, by moulders and converters and integrate them into equipment that are then used to manufacture semiconductor chips. Specially under consideration within this SEA is the use of PFA by equipment manufacturers to produce lithography machines. These machines are highly complex with thousands of parts and generate numerous highly skilled jobs and revenue for the European economy. This will be discussed further within this section. Through Eurostat, the appropriate PRODCOM codes for equipment manufacturers were identified and that data was used to generate the figures presented in this section. The PRODCOM codes identified and used are as follows: 28.99.20.20 - Machines and apparatus used solely or principally for the manufacture of semiconductor boules or wafers 28.99.20.40 - Machines and apparatus for the manufacture of semiconductor devices or of electronic integrated circuits 28.99.51.00 - Parts and accessories of machines and apparatus used solely or principally for (a) the manufacture of semiconductor boules or wafers, semiconductor devices, electronic integrated circuits or flat panel displays, (b) the manufacture or repair of masks and reticles, (c) assembling semiconductor devices or electronic integrated circuits, and (d) lifting, handling, loading or unloading of boules, wafers, semiconductor devices, electronic integrated circuits and flat panel displays SEA on TeflonTM PFA for Chemours APM RPA| 54 Table 7-10 presents the volume, revenue, and profit of semiconductor manufacturing equipment in the European Union. Due to lack of responses in the consultation phase, these values are based solely on information through Eurostat using the PRODCOM codes previously mentioned. The volume laid out in the below table is based on the quantity of machines and apparatus solely for the manufacture of semiconductors. This excluded parts and accessories for the machines and is therefore based on PRODCOM codes 28.99.20.20 and 28.99.20.40. Also due to data limitations and a lack of consultation responses the below information is not specific to semiconductor manufacturing equipment made from TeflonTM PFA. The information provided below is therefore for all semiconductor manufacturing equipment. It should be noted however that while the below information does relate specifically to fluoropolymers the information is still valid for this SEA due to most of all semiconductor manufacturing equipment being made from fluoropolymer materials. Not only that but all pieces of manufacturing equipment made from fluoropolymers are vital to the production process of semiconductors and as such any disruption to one form of fluoropolymer or one piece of equipment would cripple the industry. As a result of this interconnected nature of both equipment and fluoropolymer materials in their production, the RPA study team has elected to look at the equipment manufacturing segment and the following fabrication plant segment collectively in relation to fluoropolymers instead of just PFA. It can be seen in Table 7-10 the quantity of machines produced is estimated to increase steadily through to 2035. This is due to the demand for semiconductors increasing in line with European strategic goals to shift to a smarter digital society and establish a more secure localised supply chain as outlined in the European Chips act which is discussed more in section 7.8. Over the assessment period it is estimated that 1 million machines for semiconductor manufacturing will be produced. Table 710: Estimated volume, revenue, and profit of semiconductor manufacturing equipment sales in Europe Year Volume (items) Revenue () Profit () 2021 67,700 22,500,000,000 2,820,000,000 2022 77,200 25,700,000,000 3,210,000,000 2023 79,700 25,500,000,000 3,190,000,000 2024 82,200 25,300,000,000 3,160,000,000 2025 84,900 25,100,000,000 3,140,000,000 2026 87,600 24,900,000,000 3,110,000,000 2027 90,400 24,700,000,000 3,090,000,000 2028 93,300 24,500,000,000 3,070,000,000 2029 96,300 24,300,000,000 3,040,000,000 2030 99,300 24,200,000,000 3,020,000,000 2031 103,000 24,000,000,000 3,000,000,000 2032 106,000 23,800,000,000 2,970,000,000 2033 109,000 23,600,000,000 2,950,000,000 2034 113,000 23,400,000,000 2,930,000,000 2035 116,000 23,200,000,000 2,900,000,000 Assessment period total 1,013,900 240,600,000,000 30,080,000,000 Grand total 1,405,600 364,700,000,000 45,600,000,000 Source: RPA study team analysis The table above also presents the revenue generated from this industry, more specifically the three PRODCOM codes previously mentioned. The revenue generated from these machines is quite substantial due to the complexity of the machines as well as the price of materials used. From 2023 onwards they have been discounted at the rate of 4% to arrive at the present-day value. All values have been rounded to 3 significant figures apart from total rows. During the assessment period, 240.6 billion will be generated in revenue from the sale of semiconductor manufacturing SEA on TeflonTM PFA for Chemours APM RPA| 55 equipment. Showing the value and potential for this sector to grow and boost the European economy quite substantially. Total economic contribution to the European economy is however measured by profitability and not revenue generation. To estimate the profit generated by equipment manufacturers the RPA study team applied a profit margin of 12.5%, and this margin was extracted from Eurostat as the average operating margin for enterprises under NACE classicisation C28.99. Application of this margin results in semiconductor equipment manufacturers contribute 30.1 billion in profit to the European economy over the assessment period. Due to the limited number of enterprises contacted during the consultation phase, the precise number of enterprises and employees within the semiconductor equipment manufacturing market segment was estimated by use of Eurostat data for NACE classification C28.99. This was done by first establishing the total number of enterprises which are operating under the classification C28.99. The study team then estimated that semiconductor equipment manufacturing accounted for 3% of the total gross revenue for NACE classification C28.99 and as such the study team has assumed that 3% of the total enterprises under this classification are manufacturing semiconductor equipment. This 3% figure was generated by taking the 2020 and 2021 estimated revenues and calculating their percentage portion of total gross revenue for C28.99 from Eurostat. This approach may produce a slight overestimate or underestimate as the relation between revenue generation and number of enterprises is not always perfectly linear. The results of these calculations can be found in Table 7-11. The number of equipment manufacturers and average number of employees presented in the table have been used to estimate the number of employees in this market segment which is presented in section 7.6.2.2. The average number of employees presented in the table has been extracted from Eurostat and where no average was provided the EU 27 average has been applied to them and these have been appended with an asterisk. Table 711: Estimated number of enterprises manufacturing semiconductor manufacturing equipment in Europe Total equipment Member manufacturers under Average C28.99 employees State Total enterprises in C28.99 C28.99 per enterprise Austria 259 8 49.2 Belgium 170 5 14.6 Bulgaria 189 6 10.3 Croatia 78 2 8.3 Cyprus - - - Czechia 519 16 19.4 Denmark 360 11 14.2 Estonia 53 2 26.8* Finland 262 8 19 France 612 18 14.5 Germany 3,578 107 45.2 Greece 80 2 9.5 Hungary 360 11 15.4 Ireland : : : Italy 1,539 46 18.4 Latvia 21 1 16.2 Lithuania 22 1 16.1 Luxembourg 2 0 26.8* Malta - - - Netherlands 666 20 32.7 Poland 826 25 13.9 Portugal 309 9 14.9 SEA on TeflonTM PFA for Chemours APM RPA| 56 Table 711: Estimated number of enterprises manufacturing semiconductor manufacturing equipment in Europe Total equipment Member manufacturers under Average C28.99 employees State Total enterprises in C28.99 C28.99 per enterprise Romania 153 5 29.4 Slovakia 179 5 15 Slovenia 114 3 16.2 Spain 634 19 15.4 Sweden 490 15 12 Eu 27 Total 11,500 345 26.8 Source: RPA study team analysis Data points with an asterisk indicate data was missing from Eurostat and the EU 27 average has been applied to them Across the EU 27 it is estimated that a total of 11,500 enterprises are involved in the manufacture of special-purpose machinery. Of these 11,500, it is estimated 345 of those enterprises are involved in the manufacture of semiconductor equipment. The economic benefits and returns of this employment are estimated and presented in Section 7.6.2.2. 7.4.1.3 Fabrication plant owners Fabrication plants are not direct customers of Chemours and are at the end of the supply chain manufacturing semiconductor chips using the lithography machines made by the wet processing equipment manufacturers and other equipment produced from fluoropolymers. The manufacturing process is complex and lengthy and requires the highest quality machines using the highest quality components to produce an extremely powerful chip to be used in an advanced technology. Through Eurostat, the appropriate PRODCOM codes for fabrication plants were identified and that data was used to generate the figures presented in this section. The PRODCOM codes identified and used are as follows: 26.11.21.20 - Semiconductor diodes 26.11.21.80 - Semiconductor thyristors, diacs and triacs 26.11.22.20 - Semiconductor light emitting diodes (LEDs) 26.11.22.40 - Photosensitive semiconductor devices; solar cells, photo-diodes, photo- transistors, etc. 26.11.22.60 - Semiconductor devices (excluding photosensitive semiconductor devices, photovoltaic cells, thyristors, diacs and triacs, transistors, diodes, and light-emitting diodes) 26.11.30.03 - Multichip integrated circuits: processors and controllers, whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits 26.11.30.06 - Electronic integrated circuits (excluding multichip circuits): processors and controllers, whether or not combined with memories, converters, logic circuits, amplifiers, clock and timing circuits, or other circuits 26.11.30.23 - Multichip integrated circuits: memories 26.11.30.27 - Electronic integrated circuits (excluding multichip circuits): dynamic random- access memories (D-RAMs) 26.11.30.34 - Electronic integrated circuits (excluding multichip circuits): static random- access memories (S-RAMs), including cache random-access memories (cache-RAMs) 26.11.30.54 - Electronic integrated circuits (excluding multichip circuits): UV erasable, programmable, read only memories (EPROMs) SEA on TeflonTM PFA for Chemours APM RPA| 57  26.11.30.65 - Electronic integrated circuits (excluding multichip circuits): electrically erasable, programmable, read only memories (EPROMs), including flash EPROMs 26.11.30.67 - Electronic integrated circuits (excluding multichip circuits): other memories 26.11.30.80 - Electronic integrated circuits: amplifiers 26.11.30.91 - Other multichip integrated circuits n.e.c. 26.11.30.94 - Other electronic integrated circuits n.e.c. Table 7-12 presents the volume, revenue, and profit of semiconductor chip manufacturers in the European Union. Due to a lack of responses in the consultation phase, these values are based solely on information through Eurostat using the PRODCOM codes previously mentioned. The volume laid out in the below table is based on the quantity of semiconductors chips, circuits, and other devices described by the above codes. The quantity of chips produced is estimated to increase steadily through to 2035 due to the demand for semiconductor chips increasing in line with European strategic goals to shift to a smarter digital society. Over the assessment period it is estimated that just under 679 billion semiconductor chips and devices will be produced in Europe under the continued use scenario. Table 712: Estimated volume, revenue, and sales of semiconductor chips Year Volume Revenue () 2021 45,400,000,000 21,700,000,000 2022 51,700,000,000 24,700,000,000 2023 53,400,000,000 24,500,000,000 2024 55,100,000,000 24,300,000,000 2025 56,900,000,000 24,100,000,000 2026 58,700,000,000 23,900,000,000 2027 60,500,000,000 23,800,000,000 2028 62,500,000,000 23,600,000,000 2029 64,500,000,000 23,400,000,000 2030 66,500,000,000 23,200,000,000 2031 68,700,000,000 23,000,000,000 2032 70,900,000,000 22,900,000,000 2033 73,100,000,000 22,700,000,000 2034 75,500,000,000 22,500,000,000 2035 77,900,000,000 22,300,000,000 Assessment period total 678,800,000,000 231,300,000,000 Grand total 941,300,000,000 350,600,000,000 Source: RPA study team analysis Profit () 3,100,000,000 3,530,000,000 3,500,000,000 3,480,000,000 3,450,000,000 3,420,000,000 3,400,000,000 3,370,000,000 3,350,000,000 3,320,000,000 3,290,000,000 3,270,000,000 3,240,000,000 3,220,000,000 3,190,000,000 33,070,000,000 50,130,000,000 The table above also presents the revenue generated from the production of semiconductor chips. The revenue generated from these chips is quite substantial. This is due to the complexity and powerfulness of the chips as well as the price of materials used throughout the production process. The revenue presented in the table is a summation of the production value of the PRODCOM codes. that have been discounted at the rate of 4% from 2023 onwards to arrive at the present-day value. All values have been rounded to 3 significant figures apart from total rows. During the assessment period, 231 billion will be generated in revenue from the sale of semiconductor chips. Total economic contribution to the European economy is however measured by profitability and not revenue generation. A profit estimation was made by the RPA study team by applying the average operating margin of 14.3% for NACE classification C26.11. By applying this average European profit margin over the assessment period semiconductor chips will contribute 33.1 billion in profit to European economy. SEA on TeflonTM PFA for Chemours APM RPA| 58 Due to the limited number of enterprises contacted during the consultation phase, the precise number of enterprises and employees within the semiconductor equipment manufacturing market segment was estimated by use of Eurostat data for NACE classification C26.11. This was done by first establishing the total number of enterprises which are operating under the classification C26.11. Afterwards the study team estimated that semiconductor equipment manufacturing accounted for 5% of the total gross revenue for NACE classification C26.11 and as such the study team has assumed that 5% of the total enterprises under this classification are manufacturing semiconductor chips. This 5% figure was generated by taking the 2020 and 2021 estimated revenues and calculating their percentage portion of total gross revenue for C26.11 from Eurostat. This approach may produce a slight overestimate or underestimate as the relation between revenue generation and number of enterprises is not always perfectly linear. The results of these calculations can be found in the Table 7-13. The number of fabrication plants and average number of employees presented in the table have been used to estimate the number of employees in this market segment which is presented in section 7.6.2.3. The average number of employees presented in the table has been extracted from Eurostat and where no average was provided the EU 27 average has been applied to them and these have been marked with an asterisk. SEA on TeflonTM PFA for Chemours APM RPA| 59 Table 713: Estimated number of enterprises manufacturing semiconductors and semiconductor products in Europe Member Total fabrication plants Average C26.11 employees State Total enterprises in C26.11 under C26.11 per enterprise Austria 102 5 83.8 Belgium 105 5 29.4 Bulgaria 60 3 16.2 Croatia 70 4 8.3 Cyprus 0 0 8.9 Czechia 939 47 8 Denmark 46 2 13.8 Estonia 23 1 31.8* Finland 134 7 12.6 France 276 14 82.5 Germany 1682 84 46.8 Greece 106 5 4.6 Hungary 227 11 47.3 Ireland - - 31.8 Italy 1002 50 25.5 Latvia 22 1 20.1 Lithuania 24 1 26.1 Luxembourg 0 0 31.8* Malta - - 31.8* Netherlands 325 16 18.3 Poland 535 27 25.7 Portugal 101 5 13.2 Romania 130 7 122.2 Slovakia 396 20 8.3 Slovenia 98 5 13.4 Spain 377 19 18.9 Sweden 245 12 8.9 EU 27 Total 7000 350 31.8 Source: RPA study team analysis Note: Data points with an asterisk indicate data was missing from Eurostat and the EU 27 average has been applied to them Across the EU 27 it is estimated that a total of 7,000 enterprises are involved in the manufacture of electronic components. Of these 7,000, based on the application of the above stated share of industries in scope of this SEA, it is estimated 350 of those enterprises are involved in the manufacture of semiconductor chips, circuits, and other devices. 7.4.1.4 Other market implications The specific end use of semiconductor chips which is under review in this SEA work is the use of semiconductor chips in the automotive sector. Modern day cars, both electric and internal combustion engine, are highly advanced with many electronic systems requiring thousands of semiconductors per car. Put simply modern cars just cannot be manufactured without access to semiconductors. To that end, the RPA study team have used PRODCOM codes under the NACE classification of C29.10 to arrive at an estimate for the number of electric and internal combustion engine commuter vehicles manufactured within Europe. In 2021 an estimated 10.7 million vehicles were manufactured with a revenue value of 244 billion. To this revenue figure the study team SEA on TeflonTM PFA for Chemours APM RPA| 60 applied the C29.10 EU27 average operating surplus percentage of 6.3% from Eurostat to estimate a profit of around 15.4 billion. Accounting for the market moving towards more electric vehicle production and less internal combustion engine vehicle production and economic headwinds the annual number of motor vehicles which will require and be dependent on semiconductors was estimated along with the estimated revenue and profit. These estimates can be found in the Table 7-14, all figures have been rounded to three significant figures and all revenue and profit values have been discounted from 2023 onwards at an annual rate of 4%. Table 714: Estimated production revenue and profit from motor vehicle sales in Europe Year Production Revenue () Profit () 2021 10,700,000 244,000,000,000 15,400,000,000 2022 10,200,000 239,000,000,000 15,100,000,000 2023 9,560,000 234,000,000,000 14,800,000,000 2024 9,180,000 234,000,000,000 14,700,000,000 2025 9,000,000 237,000,000,000 14,900,000,000 2026 9,020,000 243,000,000,000 15,300,000,000 2027 9,210,000 253,000,000,000 15,900,000,000 2028 9,570,000 267,000,000,000 16,800,000,000 2029 10,100,000 283,000,000,000 17,900,000,000 2030 10,800,000 303,000,000,000 19,100,000,000 2031 11,600,000 327,000,000,000 20,600,000,000 2032 12,500,000 353,000,000,000 22,200,000,000 2033 13,600,000 382,000,000,000 24,100,000,000 2034 14,800,000 414,000,000,000 26,100,000,000 2035 16,100,000 449,000,000,000 28,300,000,000 Assessment period total 117,300,000 3,274,000,000,000 206,300,000,000 Grand total 165,940,000 4,462,000,000,000 281,200,000,000 Source: RPA Study Team analysis Over the course of the assessment period under a continued use scenario which allows the manufacture of and access to semiconductors, just over 117 million motor vehicles will be manufactured within Europe. The manufacture and sale of these vehicles will generate the market segment revenues of over 3.2 trillion resulting in profits of over 206 billion. The value therefore of the automotive sector to the European economy is large and a continued use scenario allowing semiconductors to be accessed and manufactured would permit this market to continue to generate exceptional levels of value for the European economy. The RPA study team have assumed that all motor vehicles and therefore all motor vehicle manufacturers are dependent on semiconductors. As such the study team extracted from Eurostat the number of enterprises under classification C29.10 and took the average number of employees per enterprise to estimate the number of employees whose jobs are dependent on semiconductors produced with PFA equipment (Table 7-15). Table 715: Estimated total number of enterprises and average number of employees Average C29.10 employees per Member State Total enterprises in C29.10 enterprise Austria 13 1517 Belgium 54 307 Bulgaria 5 6.6 Croatia 25 16.2 SEA on TeflonTM PFA for Chemours APM RPA| 61 Table 715: Estimated total number of enterprises and average number of employees Average C29.10 employees per Member State Total enterprises in C29.10 enterprise Cyprus 0 592.6* Czechia 81 556.6 Denmark 21 592.6 Estonia 11 592.6 Finland 33 177.8 France 130 900.1 Germany 259 2240.4 Greece 16 5.2 Hungary 68 338 Ireland 24 6.7 Italy 91 685.5 Latvia 5 86 Lithuania 6 47 Luxembourg 0 592.6* Malta 0 592.6* Netherlands 144 96.2 Poland 151 256.5 Portugal 41 200.9 Romania 23 932.9 Slovakia 397 64.1 Slovenia 21 194.4 Spain 112 641.6 Sweden 159 435.2 EU 27 Total 1890 592.6 Source: Eurostat Note: Data points with an asterisk indicate data was missing from Eurostat and the EU 27 average has been applied to them Table 7-15 shows that in total around 1,890 enterprises are estimated to be involved in the manufacture of motor vehicles and as such are reliant on access to semiconductors within Europe. The total number of employees and the value this employment brings to the European economy within this sector is discussed in section 7.6.2.4. 7.5 Health and environmental impacts As determined in the hazard assessment, TeflonTM PFA is not a concern to human or environmental health. 7.5.1 Health impacts Based on the information available and due to the fact that there is no production within the EU of TeflonTM PFA, health hazards are not of concern. Therefore, the health impacts under a continued use scenario have not been calculated. SEA on TeflonTM PFA for Chemours APM RPA| 62 7.5.2 Environmental impacts Based on the information available, the environmental concerns for TeflonTM PFA relate to its persistency. Fluoropolymers can be landfilled at the end of life and because they are stable and won't break down in the environment, they are considered environmentally neutral134. 7.6 Employment 7.6.1 Chemours APM Chemours APM has an employment footprint across the Netherlands, Belgium, France, Spain, Germany, and Denmark. There is also employment in Switzerland but due to Switzerland being outside the EU27/EEA zone employment figures for this country have been excluded from consideration. The roles performed by these employees vary from direct hands-on roles such as manufacturing, packaging, and transporting products to more functionary roles such as sales teams, compliance, and HR. The Member States benefiting from this employment are the Netherlands, Belgium, France, Spain, Germany, and Denmark and across these nations APM employ a total of 629 full time equivalent employees each of whom are paid an average salary of 70,000. This high salary is due to the technical and specialist nature of APM's operations which makes the skillset of this workforce very high and their pay considerably above the standard European benchmark figure of 30,000. Employment is beneficial for any Member state or economy to experience, the RPA study team has conducted research to quantify, in a justifiable way, the extent of this benefit for each nation. The RPA study team has first quantified how much of each employee's salary will be used to make tax and social security contributions. The study team has then determined how much of the employee's income will be removed from general money supply via savings (the household saving ratio) and subsequently how much disposable income each employee will have to drive economic activity and growth via consumption. These factors are reported in Table 7-16. All tax calculations have been estimated on a "most expensive" scenario whereby the highest possible tax bill for an individual has been estimated by assuming all individuals are unmarried and have no dependents. The tax income per person is therefore likely to be an overestimation of the true tax bills most of these individuals would face and subsequently national tax receipts would be lower. The household saving ratio is the percentage of a person's gross disposable income which is saved within a set period of a year, this value is typically reported by country quarterly but there are large variations in the frequency at which nations report this statistic. For reference the values reported below for the Netherlands relate to the saving ratio as of September 2021, the values for Belgium, Spain and Denmark refer to the rate as of December 2021 and for Germany and France the reported rate is from March 2022. Table 716: Estimated economic contribution of employment from Chemours APM European operations Number of Tax income Household Disposable Member Employees Average per person saving ratio income per State [1] Salary () [1] () [2] Net pay () [3] person () Netherlands 464.9 70,000 22,178 47,822 16.31% 40,022 Belgium 76.2 70,000 30,719 39,281 12.50% 34,371 France 66.3 70,000 26,541 43,459 17.36% 35,915 Spain 15 70,000 22,418 47,582 13.81% 41,011 Germany 5.7 70,000 27,767 42,233 11.50% 37,376 134 https://fluoropolymers.plasticseurope.org/application/files/6216/3178/0517/Fluoropolymers_Safe_Hand_ EN__June_2021.pdf SEA on TeflonTM PFA for Chemours APM RPA| 63 Table 716: Estimated economic contribution of employment from Chemours APM European operations Number of Tax income Household Disposable Member Employees Average per person saving ratio income per State [1] Salary () [1] () [2] Net pay () [3] person () Denmark 1 70,000 30,674 39,326 8.17% 36,113 [1] Source: Chemours APM consultation [2] Source: https://salaryaftertax.com/ for France, Spain, Belgium and Germany; https://www.icalculator.info/netherlands/salarycalculator/annual/2022.html for the Netherlands; https://www.icalculator.info/denmark.html for Denmark [3] Source: https://tradingeconomics.com/countrylist/personalsavings accessed 6th June 2022 As can be seen from the above table Member States could be generating up to a maximum of between 22,000 and nearly 31,000 per employee because of Chemours APM operations. Consequently, European governments could receive tax receipts of up to a maximum of just over 14.9 million per year. This funding would be used to finance fiscal policy in Member States which would allow for economic growth through government expenditure and the government expenditure multiplier this multiplier however cannot currently be estimated for each Member State due to data constraints. Likewise, after deducting the average household saving ratio, employees of APM have between 34,000 and 41,000 each to spend in disposable income per year. Theoretically not all this income would be truly disposable as each individual employee would have a basic level of consumption, they would have to spend to live, and some would be required to service household debt. However, whether this income was being spent on luxury items, servicing debt, or satisfying basic level consumption needs, consumption and economic activity would be taking place allowing economic growth to take place. In fact, per year Chemours APM employees through their disposable income would be able to contribute over 24.5 million in economic activity, which would bring the total yearly economic contribution of these employees to just over 39.4 million. This would also be subject to a separate consumption- based multiplier but once again due to data constraints and individual Member State complexities it is not currently possibly to accurately predict these multipliers but the returns to national and the wider European economy from Chemours APM employment is self-evident and substantial once multiplied. The total contributions made to each Member State's economy and the European economy have been summarised in Table 7-17. Table 717: Estimated economic contributions of Chemours APM employees by Member State Member State Total tax receipts () Total disposable income () Total Netherlands 10,300,000 18,600,000 Belgium 2,340,000 2,620,000 France 1,760,000 2,380,000 Spain 336,000 615,000 Germany 158,000 213,000 Denmark 30,700 36,100 Total 14,900,000 24,500,000 Source: RPA study team analysis 28,900,000 4,960,000 4,140,000 951,000 371,000 66,800 39,400,000 Chemours APM employees are therefore able to make a significant annual contribution to the wider and national economies given their large average salary and the number of staff employed. The final form of analysis to assess the contribution of these employees by the RPA study team was to extrapolate these contributions across the duration of the assessment period and discount at the appropriate 4% rate. The results of this are found in Table 7-18. SEA on TeflonTM PFA for Chemours APM RPA| 64 Table 718: Estimated discounted annual estimate of economic contribution from Chemours APM employees Year Economic contribution () 2022 39,400,000 2023 37,900,000 2024 36,400,000 2025 35,000,000 2026 33,700,000 2027 32,400,000 2028 31,100,000 2029 29,900,000 2030 28,800,000 2031 27,700,000 2032 26,600,000 2033 25,600,000 2034 24,600,000 2035 23,700,000 Assessment period total 284,100,000 Grand Total 432,800,000 Source: RPA study team analysis Therefore, as can be seen above over the course of the assessment period from 2026 to 2035 the 629 full time equivalent positions related to Chemours APM operations will generate a total discounted contribution to the wider European economy of over 284 million. Once again however it should be noted this value is likely to be considerably higher as these figures will be subject to government spending, money, and consumption multipliers but these multipliers cannot currently be accurately estimated. While the whole of the European economy benefits from this employment and these greater levels of spending the impacts are not evenly distributed. Countries such as the Netherlands, Belgium and France are in receipt of the majority of employment benefits from APM under the continued use scenario. This is not an issue as while some Member States are receiving a greater share of returns the whole economy is receiving economic contributions from this employment but it is also an indicator that under a non-use scenario the impacts of unemployment will not be evenly distributed and this is discussed more in Section 8.6. 7.6.2 Semiconductor industry and automotive The semiconductor industry offers a significant amount of highly skilled jobs. According to SEMI, it is estimated that 250,000 people are employed directly because of semiconductor production, with an additional 2.5M jobs in the end-to-end electronic supply chain135. There's an additional 4,500 number of people directly employed because of the manufacture of fluoropolymers136. The use of TeflonTM PFA, and fluoropolymers in general, enable numerous other sectors generating associated employment. The increased demand of semiconductor chips recently would only continue to increase the amount of these highly skilled jobs that will become available. 135 https://www.semi.org/sites/semi.org/files/2020-12/SEMI%20Chemical%20Watch%20Presentation.pdf 136 https://fluoropolymers.plasticseurope.org/application/files/1216/5485/3500/Fluoropolymers_Market_Dat a_Update_-_Final_report_-_May_2022.pdf SEA on TeflonTM PFA for Chemours APM RPA| 65 7.6.2.1 Moulders and converters The economic contributions from moulders and converters are based solely on the responses the RPA study team received during consultation. RPA received multiple responses from moulders and converters located in Germany and where possible total employees and average salaries have been added together. The average salary for Greece and the first line for Germany was extracted from Eurostat due to no salary information being provided. The two remaining salaries for Germany of 45,000 and 41,000 were derived using information obtained during consultation. The tax income, household saving ratio and disposable income were then calculated in the same manner as the previous calculations in this section and are summarised in Table 7-19. Table 719: Estimated economic contributions of employment from moulders and converters within Europe Total Tax income Household Disposable Member employees Average per person saving ratio income per State [1] salary () [2] () [3] Net pay () [4] person () Austria 120 67,200 14,909 52,291 13.83% 45,059 Germany 300 58,100 21,949 36,151 11.50% 31,994 Germany 10 45,000 15,689 29,311 11.50% 25,940 Germany 39 41,000 13,865 27,135 11.50% 24,014 Total 469 [1] Source: RPA downstream user consultation [2] Source: Eurostat, and downstream user consultation [3] Source: https://www.icalculator.info/european-union-tax-calculators.html and https://salaryaftertax.com/ [4] Source: https://tradingeconomics.com/country-list/personal-savings?continent=europe and https://www.ceicdata.com/en/countries The individual data results in a total annual contribution to the European economy from moulder and converter employees of just under 25.3 million. This number is again a substantial underestimation of the true value benefiting the economy from employees in this sector. This underestimation is due to limited data collected during consultation and not being able to extract this information from Eurostat. Secondly, this value will not be the true benefit returned to the wider European economy due to multipliers on both government spending and consumption occurring. Due to reasons previously outline, these have not been estimated. Table 7-20 summarises the total benefits in terms of tax income and disposable income by Member State. Table 720: Estimated economic contributions of moulders and converters employees by Member State Member State Austria Total tax receipts () 1,790,000 Germany 6,580,000 Germany 157,000 Germany 541,000 Total 9,068,000 Source: RPA study team analysis Total disposable income () 5,410,000 9,600,000 259,000 937,000 16,206,000 Total () 7,200,000 16,180,000 416,000 1,478,000 25,274,000 Table 7-21 presents the annual discounted economic contributions from the employees of contacted moulders and converters operating within Europe. The figures have been discounted post 2022 at the standard 4% discount rate with all figures also having been rounded to three significant figures. SEA on TeflonTM PFA for Chemours APM RPA| 66 Table 721: Estimated discounted estimates of economic contributions from moulders and converters employees within Europe Year 2022 Economic contribution () 25,300,000 2023 24,300,000 2024 23,400,000 2025 22,500,000 2026 21,600,000 2027 20,800,000 2028 20,000,000 2029 19,200,000 2030 18,500,000 2031 17,800,000 2032 17,100,000 2033 16,400,000 2034 15,800,000 2035 15,200,000 Assessment period total 182,400,000 Grand total 277,900,000 Source: RPA study team analysis Over the course of the assessment period, 2026 to 2035, the known employees of moulders and converters operating within Europe will provide economic returns of over 182 million. The true value of this will be much higher for the European economy once additional moulders and converters and economic multipliers have been considered. 7.6.2.2 Wet process equipment manufacturers The economic contributions of persons employed by equipment manufacturers has been based solely on data obtained from Eurostat using the NACE code C28.99. The RPA study team assumed 3% equipment manufacturer enterprises share of this NACE code based on PRODCOM codes 28.99.20.20, 28.99.20.40 and 28.99.51.00. This allowed an estimate for the number of employees, as well as the average salary of employees per Member State. From this, the economic contributions could be estimated in the same manner as previously stated above. Data appended with an asterisk are where the European Union 27 average has been used, due to these countries reporting insufficient data to Eurostat. Table 7-22 presents the summarised economic contributions in terms of tax revenue and disposable income available for these employees by each Member State across Europe. It can be seen in Table 7-22 that there is an estimated total of 9,237 employees in this sector across the European Union. Table 722: Estimated economic contribution of employment from semiconductor equipment manufacturers within Europe Household Member Total Average Individual tax saving state Employees salary () [1] income () [2] Net pay () ratio[3] Austria 382 68,600 15,368 53,232 13.83% Belgium 74 63,900 26,899 37,001 28.20% Bulgaria 58 11,400 1,140 10,260 19.00% Croatia 19 19,100 3,820 15,280 16.40% Cyprus - - - - 18.00% Czechia 302 23,500 3,525 19,975 16.77% Denmark 153 68,700 30,093 38,607 21.24% Individual disposable income () 45,870 26,567 8,311 12,774 - 16,625 30,407 SEA on TeflonTM PFA for Chemours APM RPA| 67 Table 722: Estimated economic contribution of employment from semiconductor equipment manufacturers within Europe Household Individual Member Total Average Individual tax saving disposable state Employees salary () [1] income () [2] Net pay () ratio[3] income () Estonia 43* 55,500* 11,100 44,400 31.00% 30,636 Finland 149 57,500 20,247 37,253 26.20% 27,493 France 266 62,000 22,529 39,471 16.73% 32,868 Germany 4,852 58,800 22,172 36,628 11.50% 32,416 Greece 23 27,700 4,502 23,198 6.40% 21,713 Hungary 166 19,900 2,985 16,915 21.60% 13,261 Ireland - - - - 19.90% - Italy 850 54,400 20,092 34,308 12.60% 29,985 Latvia 10 22,400 4,552 17,848 20.60% 14,171 Lithuania 11 19,100 3,820 15,280 19.90% 12,239 Luxembourg 2 * 55,500* 15,872 39,628 55.00% 17,833 Malta - - - - 37.80% - Netherlands 653 92,600 32,233 60,367 15.02% 51,300 Poland 344 17,300 2,588 14,712 22.20% 11,446 Portugal 138 23,000 15,871 7,129 17.70% 5,867 Romania 135 14,800 1,480 13,320 19.50% 10,723 Slovakia 81 20,600 3,914 16,686 5.33% 15,797 Slovenia 55 33,900 8,587 25,313 11.40% 22,427 Spain 293 44,500 12,271 32,229 -0.79% 32,484 Sweden 176 61,900 19,808 42,092 19.78% 33,766 Total 9,237 Sources : [1] Eurostat, https://ec.europa.eu/eurostat/databrowser/view/SBS_NA_CON_R2__custom_3183455/default/table?lang= en [2]https://www.icalculator.info/europeanuniontaxcalculators.html and https://salaryaftertax.com/ [3]https://tradingeconomics.com/countrylist/personalsavings?continent=europe and https://www.ceicdata.com/en/countries Note: Data points with an asterisk indicate data was missing from Eurostat and the EU 27 average has been applied to them The RPA study team have estimated that several EU Member States do not have employees working in the semiconductor manufacturing equipment sector, as such there will be no employee economic contributions from these nations. For each of the remaining Member States the total tax receipts and total disposable income provided per total of employees has been calculated and is presented in Table 7-23. Employees from the semiconductor equipment manufacturing sector provide over 468 million in value to the European economy each year. The level of employment and the value of this employment is substantial for the European economy demonstrating that supply chains within Europe utilising fluoropolymers and fluoropolymer products have additional supply chain segments which return incredible value for the European economy. Table 723: Estimated economic contribution of semiconductor equipment manufacturers employees by Member State and totals Member State Total tax receipts () Total disposable income () Total () Austria 5,870,000 17,500,000 23,370,000 Belgium 2,000,000 1,980,000 3,980,000 Bulgaria 66,600 485,000 551,600 Croatia 74,200 248,000 322,200 SEA on TeflonTM PFA for Chemours APM RPA| 68 Table 723: Estimated economic contribution of semiconductor equipment manufacturers employees by Member State and totals Member State Total tax receipts () Total disposable income () Total () Cyprus - - - Czechia 1,060,000 5,020,000 6,080,000 Denmark 4,620,000 4,660,000 9,280,000 Estonia 473,000 1,310,000 1,783,000 Finland 3,020,000 4,110,000 7,130,000 France 6,000,000 8,750,000 14,750,000 Germany 108,000,000 157,000,000 265,000,000 Greece 103,000 495,000 598,000 Hungary 496,000 2,210,000 2,706,000 Ireland - - - Italy 17,100,000 25,500,000 42,600,000 Latvia 46,500 145,000 191,500 Lithuania 40,600 130,000 170,600 Luxembourg 25,500 28,700 54,200 Malta - - - Netherlands 21,100,000 33,500,000 54,600,000 Poland 891,000 3,940,000 4,831,000 Portugal 2,190,000 810,000 3,000,000 Romania 200,000 1,450,000 1,650,000 Slovakia 315,000 1,270,000 1,585,000 Slovenia 476,000 1,240,000 1,716,000 Spain 3,590,000 9,510,000 13,100,000 Sweden 3,490,000 5,960,000 9,450,000 Total 181,247,400 287,251,700 468,499,100 Source: RPA study team analysis Table 7-24 presents the annual discounted economic contributions from the employees of contacted moulders and converters operating within Europe. The figures have been discounted post 2022 at the standard 4% discount rate with all figures also having been rounded to three significant figures. Table 724: Estimated discounted estimates of economic contributions from semiconductor equipment manufacturers employees within Europe Year Economic contribution () 2022 468,000,000 2023 450,000,000 2024 433,000,000 2025 416,000,000 2026 400,000,000 2027 385,000,000 2028 370,000,000 2029 356,000,000 2030 342,000,000 2031 329,000,000 2032 316,000,000 2033 304,000,000 2034 293,000,000 2035 281,000,000 Assessment period total 3,376,000,000 Grand total 5,143,000,000 SEA on TeflonTM PFA for Chemours APM RPA| 69 Table 724: Estimated discounted estimates of economic contributions from semiconductor equipment manufacturers employees within Europe Year Economic contribution () Source: RPA study team analysis As seen from the Table above it can be seen that the employees of semiconductor equipment manufacturing over the course of the assessment period will contribute just under 3.4 billion. This is likely a substantial underestimation of the true return to the European economy because as previously mentioned no economic multipliers have been calculated and applied to the RPA study team model but also manufacturing semiconductor equipment is a highly skilled technical job. It is therefore not unreasonable to assume that many of the above estimated employees may be on a salary higher than that of the sectoral NACE average which will increase their economic contribution. 7.6.2.3 Fabrication plant owners The economic contributions of persons employed by fabrication plants has been based solely on data obtained from Eurostat using the NACE code 26.11. The RPA study team assumed a 5% fabrication plant enterprise share of this NACE code based on PRODCOM codes 26.11.22.20, 26.11.22.40 and 26.11.22.60. This allowed an estimate for the number of employees, as well as the average salary of employees per Member State. From this, the economic contributions could be estimated in the same manner as previously stated above. Data appended with an asterisk are where the European Union 27 average has been used, due to these countries reporting insufficient data to Eurostat. Table 7-25, presents the summarised economic contributions in terms of tax revenue and disposable income available for these employees by each Member State across Europe. It can be seen in Table 7-25 that there is an estimated total of 10,695 employees in this sector across the European Union. Table 725: Estimated economic contribution of employment from semiconductor manufacturing within Europe Member state Employees Average salary () [1] Individual tax income () [2] Net pay () Household saving ratio [3] Individual disposable income () Austria 427 85,400 21,664 63,736 13.83% 54,921 Belgium 154 74,800 33,725 41,075 28.20% 29,492 Bulgaria 49 13,000 1,300 11,700 19.00% 9,477 Croatia 29 12,900 2,580 10,320 16.40% 8,628 Cyprus 0 - - - 18.00% - Czechia 376 21,700 5,642 16,058 16.77% 13,365 Denmark 32 68,900 30,180 38,720 21.24% 30,496 Estonia 37* 55,700* 11,140 44,560 31.00% 30,746 Finland 84 56,900 19,972 36,928 26.20% 27,253 France 1,139 73,400 28,246 45,154 16.73% 37,600 Germany 3,936 72,000 28,189 43,811 11.50% 38,773 Greece 24 32,600 26,448 6,152 6.40% 5,758 Hungary 537 15,700 2,355 13,345 21.60% 10,462 Ireland 0 - - - 19.90% - Italy 1,278 53,300 19,611 33,689 12.60% 29,444 Latvia 22 55,700* 12,211 43,489 20.60% 34,530 Lithuania 31 15,900 3,180 12,720 19.90% 10,189 Luxembourg 0 - - - 55.00% - Malta 0 - - - 37.80% - Netherlands 297 55,700* 16,878 38,822 15.02% 32,991 Poland 687 16,100 2,409 13,691 22.20% 10,652 Portugal 67 24,000 16,449 7,551 17.70% 6,214 SEA on TeflonTM PFA for Chemours APM RPA| 70 Table 725: Estimated economic contribution of employment from semiconductor manufacturing within Europe Member state Employees Average salary () [1] Individual tax income () [2] Net pay () Household saving ratio [3] Individual disposable income () Romania 794 55,700* 5,570 50,130 19.50% 40,355 Slovakia 164 18,000 3,420 14,580 5.33% 13,803 Slovenia 66 24,700 5,572 19,128 11.40% 16,947 Spain 356 40,600 10,692 29,908 -0.79% 30,144 Sweden 109 59,900 19,168 40,732 19.78% 32,675 Total 10,695 Sources: [1] Eurostat, https://ec.europa.eu/eurostat/databrowser/view/SBS_NA_CON_R2__custom_3183455/default/table?lang= en [2] https://www.icalculator.info/europeanuniontaxcalculators.html and https://salaryaftertax.com/ [3] https://tradingeconomics.com/countrylist/personalsavings?continent=europe and https://www.ceicdata.com/en/countries The RPA study team have estimated that several EU Member States do not have employees working in the manufacture of semiconductors, as such there will be no employee economic contributions from these nations. For each of the remaining Member States the total tax receipts and total disposable income provided per total of employees has been calculated and is presented in Table 7-26. The employees from fabrication plants provide over 555 million in value to the European economy each year. The level of employment and the value of this employment is substantial for the European economy. Table 726: Estimated economic contribution of semiconductor manufacturers employees by Member State and totals Member State Total tax receipts () Total disposable income () Total () Austria 9,260,000 23,500,000 32,760,000 Belgium 5,210,000 4,550,000 9,760,000 Bulgaria 63,200 461,000 524,200 Croatia 74,900 251,000 325,900 Cyprus - - - Czechia 2,120,000 5,020,000 7,140,000 Denmark 958,000 968,000 1,926,000 Estonia 407,000 1,120,000 1,527,000 Finland 1,690,000 2,300,000 3,990,000 France 32,200,000 42,800,000 75,000,000 Germany 111,000,000 153,000,000 264,000,000 Greece 645,000 140,000 785,000 Hungary 1,260,000 5,620,000 6,880,000 Ireland - - - Italy 25,100,000 37,600,000 62,700,000 Latvia 270,000 763,000 1,033,000 Lithuania 99,600 319,000 418,600 Luxembourg - - - Malta - - - Netherlands 5,020,000 9,810,000 14,830,000 Poland 1,660,000 7,320,000 8,980,000 Portugal 1,100,000 414,000 1,514,000 Romania 4,420,000 32,100,000 36,520,000 SEA on TeflonTM PFA for Chemours APM RPA| 71 Table 726: Estimated economic contribution of semiconductor manufacturers employees by Member State and totals Member State Total tax receipts () Total disposable income () Total () Slovakia 562,000 2,270,000 2,832,000 Slovenia 366,000 1,110,000 1,476,000 Spain 3,810,000 10,700,000 14,510,000 Sweden 2,090,000 3,560,000 5,650,000 Total 209,385,700 345,696,000 555,081,700 Source: RPA study team analysis Table 7-27 presents the annual discounted economic contributions from the employees of contacted moulders and converters operating within Europe. The figures have been discounted post 2022 at the standard 4% discount rate with all figures also having been rounded to three significant figures. Table 727: Estimated discounted estimates of economic contributions from semiconductor manufacturers employees within Europe Year Economic contribution () 2022 555,000,000 2023 533,000,000 2024 513,000,000 2025 493,000,000 2026 474,000,000 2027 456,000,000 2028 438,000,000 2029 421,000,000 2030 405,000,000 2031 390,000,000 2032 375,000,000 2033 360,000,000 2034 346,000,000 2035 333,000,000 Assessment period total 3,998,000,000 Grand total 6,092,000,000 Source: RPA study team analysis As seen from the Table above the employees of fabrication plant owners over the course of the assessment period will contribute just under 4 billion to the European economy. This is likely a substantial underestimation of the true return to the European economy because as previously mentioned no economic multipliers have been calculated and applied to the RPA study team model but also manufacturing semiconductor equipment is a highly skilled technical job. It is therefore not unreasonable to assume that many of the above estimated employees may be on a salary higher than that of the sectoral NACE average which will increase their economic contribution. Additionally, the investments made by Intel (discussed in Section 7.7) will create a significant number of jobs and boost the European semiconductor revenue. These investments in multiple European countries will create new high-paying jobs. Specifically in Germany the construction of a new fabrication plant will create 7,000 construction jobs and once complete 3,000 high tech jobs at Intel with tens of thousands of additional jobs across suppliers and partners. In Italy, the back-end manufacturing facilities will create 1,500 Intel jobs plus an additional 3,500 jobs across suppliers and partners, with operations starting between 2025 and 2027. In France, the new R&D hub will create 1,000 high tech jobs, with 450 jobs becoming available at the end of 2024. In summary, with Intel's SEA on TeflonTM PFA for Chemours APM RPA| 72 long-established history in the EU for the last 30 years and its current employee count of 10,000 once complete Intel itself will be providing 26,000 jobs throughout Europe137. 7.6.2.4 Other market implications As previously mentioned, the semiconductor industry being able to sell semiconductors in Europe is critical to the continuation of the European automotive sector for both internal combustion engine and electric vehicles. Therefore the employment generated by this sector should also be considered and by using the information presented in Table 7-15 (Estimated total number of enterprises and average number of employees) the study team have been able to estimate the number of employees present within the NACE C29.10 classification across the whole EU27 and by each member state. This information is provided in Table 7-28. Table 728: Estimated economic contribution of motor vehicle manufacturing employees within Europe Individual Individual Member Average tax income household disposable state Employees salary () () Net pay () saving ratio income () Austria 19,721 76,300 18,087 58,213 13.83% 50,162 Belgium 16,578 64,800 27,463 37,337 28.20% 26,808 Bulgaria 33 4,700 470 4,230 19.00% 3,426 Croatia 405 20,500 4,100 16,400 16.40% 13,710 Cyprus - 77,100* 16,870 60,230 18.00% 49,389 Czechia 45,085 35,500 5,325 30,175 16.77% 25,115 Denmark 12,445 77,100* 33,772 43,328 21.24% 34,125 Estonia 6,519 77,100* 15,420 61,680 31.00% 42,559 Finland 5,867 44,500 12,196 32,305 26.20% 23,841 France 117,013 68,500 25,789 42,711 16.73% 35,565 Germany 580,264 96,400 40,008 56,392 11.50% 49,907 Greece 83 25,300 4,584 20,716 6.40% 19,390 Hungary 22,984 30,900 4,635 26,265 21.60% 20,592 Ireland 161 38,600 8,080 30,520 19.90% 24,447 Italy 62,381 54,800 20,266 34,534 12.60% 30,183 Latvia 430 77,100 17,133 59,967 20.60% 47,614 Lithuania 282 20,200 4,040 16,160 19.90% 12,944 Luxembourg - 77,100* 19,675 57,425 55.00% 25,841 Malta - 77,100* 18,170 58,930 37.80% 36,654 Netherlands 13,853 65,700 20,585 45,115 15.02% 38,339 Poland 38,732 26,200 3,488 22,712 22.20% 17,670 Portugal 8,237 33,700 11,737 21,963 17.70% 18,076 Romania 21,457 77,100* 7,710 69,390 19.50% 55,859 Slovakia 25,448 33,400 6,346 27,054 5.33% 25,612 Slovenia 4,082 77,100 24,490 52,610 11.40% 46,612 Spain 71,859 52,400 15,092 37,308 -0.79% 37,603 Sweden 69,197 80,600 25,792 54,808 19.78% 43,967 Total 1,143,113 Source: RPA study team analysis Data points with an asterisk indicate data was missing from Eurostat and the EU 27 average has been applied to them 137 https://www.intel.com/content/www/us/en/newsroom/news/eu-news-2022-release.html#gs.b0i9g6 accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 73 Over 1.14 million persons are estimated therefore to be employed within the manufacture of motor vehicles market. Following the same methodology as the previous calculation in this section the study team have calculated the total tax receipts, total disposable income, and total annual economic contribution these employees make. These estimates are presented in Table 7-29. Table 729: Estimated economic contribution of motor vehicle manufacturing employees by Member State and total Member State Total tax receipts () Total disposable income () Total () Austria 357,000,000 989,000,000 1,346,000,000 Belgium 455,000,000 444,000,000 899,000,000 Bulgaria 15,500 113,000 128,500 Croatia 1,660,000 5,550,000 7,210,000 Cyprus - - - Czechia 240,000,000 1,130,000,000 1,370,000,000 Denmark 420,000,000 425,000,000 845,000,000 Estonia 101,000,000 277,000,000 378,000,000 Finland 71,600,000 140,000,000 211,600,000 France 3,020,000,000 4,160,000,000 7,180,000,000 Germany 23,200,000,000 29,000,000,000 52,200,000,000 Greece 381,000 1,610,000 1,991,000 Hungary 107,000,000 473,000,000 580,000,000 Ireland 1,300,000 3,930,000 5,230,000 Italy 1,260,000,000 1,880,000,000 3,140,000,000 Latvia 7,370,000 20,500,000 27,870,000 Lithuania 1,140,000 3,650,000 4,790,000 Luxembourg - - - Malta - - - Netherlands 285,000,000 531,000,000 816,000,000 Poland 135,000,000 684,000,000 819,000,000 Portugal 96,700,000 149,000,000 245,700,000 Romania 165,000,000 1,200,000,000 1,365,000,000 Slovakia 161,000,000 652,000,000 813,000,000 Slovenia 100,000,000 190,000,000 290,000,000 Spain 1,080,000,000 2,700,000,000 3,780,000,000 Sweden 1,780,000,000 3,040,000,000 4,820,000,000 Total 33,100,000,000 48,100,000,000 81,100,000,000 Source: RPA study team analysis The over 1.14 million staff employed by motor vehicle manufacturers are therefore estimates to make an annual contribution to the European economy to the tune of 81.1 billion. This value is so high due to the high wages of many workers throughout the European union and the volume of employees the market employs. At the same time however, this value is likely a substantial underestimation as this figure has not been subjected to government spending and consumption multipliers. These multipliers occur within the economy and will greatly increase the true value that these employees bring to the economy through their tax revenues and consumption spending. However due to data limitations it is not currently possible for these values to be estimated and applied to the prediction of economic returns. In Table 7-30 the annual contributions have been discounted at the 4% rate and expanded across the full assessment period. SEA on TeflonTM PFA for Chemours APM RPA| 74 Table 730: Estimated discounted economic contribution of motor vehicle manufacturing employees Year Economic contribution () 2022 81,100,000,000 2023 78,000,000,000 2024 75,000,000,000 2025 72,100,000,000 2026 69,400,000,000 2027 66,700,000,000 2028 64,100,000,000 2029 61,700,000,000 2030 59,300,000,000 2031 57,000,000,000 2032 54,800,000,000 2033 52,700,000,000 2034 50,700,000,000 2035 48,700,000,000 Assessment period total 585,100,000,000 Grand total 891,300,000,000 Source: RPA study team analysis From the above table over the assessment period the employees of motor vehicle manufacturers will make a total economic contribution of over 585 billion. This economic contribution will also be spread across many Member States allowing for most of Europe to share and benefit from the employment generated by motor vehicle manufacturers. 7.7 Innovations and investments Chemours APM is a global company meaning it has a global footprint for its research and development (R&D) and capital investment activities. Currently some R&D activities take place within Europe which are conducted by APM. Given that most of the business operations of the Chemours APM division are associated with fluoropolymers, most of their R&D spending is connected to fluoropolymers, with a total annual investment of 40.7 million being made by Chemours APM spread across two fronts. The first area of focus for Chemours APM's research and development spending is in the field of alternatives research. Specifically, APM take a proactive role in the development of alternative variants of fluoropolymer materials which deliver greater results in terms of purity than their current portfolio of goods. They also conduct extensive research and development into their manufacturing processes to further refine and develop alternative fluoropolymer materials but APM does not conduct research into alternatives to fluoropolymers. To this end during consultation and in their questionnaire response APM indicated they invest annually 13.1 million into R&D activities dedicated to exploring and assessing possible alternatives to fluoropolymer materials, such as replacing polymerisation aids in manufacturing processes. The second area of focus for research and development is the continued development of new manufacturing processes, products, and applications of existing fluoropolymer technologies to open new markets allow downstream supply chains to grow and to develop greater efficiencies in production. The annual value of these investments from APM amount to 27.6 million calculated by deducting 13.1 million from the total annual budget of 40.7 million. These investments have returned some positive results so far in terms of discovering viable alternatives to fluoropolymers. For example, a recent announcement from Chemours discussed the commercialisation of an alternative to fluorinated surfactants in one product line. Although this is not directly related to TeflonTM PFA, it is still a positive outcome to R&D investments made by Chemours. Under a non-use scenario these investments and research efforts SEA on TeflonTM PFA for Chemours APM RPA| 75 would not continue due to there being no business portfolio present for Chemours APM to fund R&D activities. This is because all of Chemours APMs' products are fluoropolymers. The discounted annual value of this research and development spending is presented in Table 7-31. Table 731: Estimated discounted annual R&D spending Year Total fluoropolymer R&D () Operational R&D () 2021 40,700,000 27,500,000 2022 39,100,000 26,500,000 2023 37,600,000 25,500,000 2024 36,100,000 24,500,000 2025 34,800,000 23,500,000 2026 33,400,000 22,600,000 2027 32,100,000 21,800,000 2028 30,900,000 20,900,000 2029 29,700,000 20,100,000 2030 28,600,000 19,300,000 2031 27,500,000 18,600,000 2032 26,400,000 17,900,000 2033 25,400,000 17,200,000 2034 24,400,000 16,500,000 2035 23,500,000 15,900,000 Assessment period total 281,900,000 190,800,000 Grand total 470,200,000 318,300,000 Source: RPA study team analysis Alternatives R&D () 13,100,000 12,600,000 12,100,000 11,700,000 11,200,000 10,800,000 10,400,000 9,970,000 9,580,000 9,220,000 8,860,000 8,520,000 8,190,000 7,880,000 7,570,000 90,990,000 151,690,000 After discounting at the 4% ECHA rate the total amount of R&D investment Chemours APM will make in Europe over the course of the 20262035 assessment period stands at over 281 million with over 90.9 million of this being dedicated to the exploration of alternatives. 7.7.1.1 Moulders and converters Within the supply chain moulders and converters receive the TeflonTM PFA resin from Chemours and are responsible for forming various components that can be used within the semiconductor manufacturing process. During the hot processing of the resins, TeflonTM PFA is melted down at high temperatures and moulded to from these components. Specifications of the product typically come further down the supply chain and are fed back up to the chemical providers to produce high purity products. Therefore, it is not likely that moulders and converters within the supply chain will invest in R&D for alternatives to TeflonTM PFA. However, it is likely that they will do R&D to experiment with methods to increase purity and reduce contamination. During consultation, the RPA study team received a few responses from moulders and converters within the supply that disclosed their R&D investments, equating to between hundreds of thousands and hundreds of millions of Euros. There was quite a large range between the two, however this is dependent on the types of projects the companies are involved in. The nature of the projects was not disclosed to the RPA team. However, it is likely these investments will investigate ways that material processing can be improved to align with mitigation efforts to control latent defects. Improving the consistency and quality control further down the semiconductor manufacturing supply chain. SEA on TeflonTM PFA for Chemours APM RPA| 76 7.7.1.2 Wet process equipment manufacturers Within the supply chain wet processing equipment manufacturers will receive components from the moulders and converters and will integrate them into their machines. TeflonTM PFA will mostly be used in areas that are in direct contact with high purity process chemicals. These equipment manufacturers are likely to invest a lot of money into R&D to improve their machines to advance the technology of semiconductor chips. It is not likely their R&D investments will go into non-fluoropolymer alternatives. During consultation, the RPA study team received little responses from wet processing equipment manufacturers on their investments. The figures received were in the billions, however, the scope of the investments could not be shared with RPA. Again, this is likely to be invested in advancing their machine technologies to keep up with chip advancements specified by fabrication plants further down the supply chain. Global equipment market is approaching 150 billion US dollars, in 2022 the estimated year-on-year growth for wafter process equipment is 20.8%, with test and related equipment at 12.3% and assembly equipment having a year-on-year growth of 8.2%138. The established foothold of European based semiconductor equipment manufacturers will allow them to benefit greatly from this rapid expansion of fabrication plants causing new equipment to be required and current facilities being upgraded. The current share of the global market held by European industries cannot currently be determined based on data available to the RPA study team. 7.7.1.3 Fabrication plant owners Fabrication plants are typically the players in the supply chain governing all technical requirements including cleanliness and purity for component materials. While these businesses will invest in R&D it is not necessarily targeted towards development of new materials or fluoropolymers in general. R&D is likely to be geared towards process improvements and advanced node structure with investments likely in the billions, according to downstream user consultation. As fabrication plants are generally specifying cleanliness and purity requirements, they are most likely the players in the supply chain governing R&D topics further upstream. Presented at the SEMI West 2022 Market Symposium139, it was stated that a total of 61 new fabrication facilities will begin construction across the globe from 2021 to 2023. Of these 61 facilities, 42 will be in Asia, 10 in North America and 9 in Europe. It can be seen from these numbers that an increase in Europe's fabrication facilities is needed to secure its supply in semiconductor chips and become a competitive player in this industry. In early 2022, Intel announced plans to invest 80 billion into the European Union's semiconductor value chain over the coming decade140. The scope of these invests include everything from R&D to manufacturing and packaging technologies. An initial 17 billion will go towards a fabrication mega- site located in Germany, an R&D facility in France, and R&D, manufacturing and foundry services in Ireland, Italy, Poland, and Spain118. Once complete the total investments in Ireland will be 30 billion 138 Source: SEMI West 2022 Day 1 SEMI Market Symposium (agenda can be found here: https://www.semiconwest.org/programs/market-symposium ) 139 SEMI West 2022 Day 1 SEMI Market Symposium. Agenda can be found here: https://www.semiconwest.org/programs/market-symposium 140 https://www.intel.com/content/www/us/en/newsroom/news/eu-news-2022-release.html#gs.b0i9g6 accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 77 and in Italy investments will total 4.5 billion118. Additionally, in past two years Intel has spent more than 10 billion with European suppliers, and that spend is expected to double by 2026118. In July 2022, GlobalFoundries Inc. and ST Microelectronics announced a partnership in constructing a new 300 mm semiconductor manufacturing facility Crolles, France141. The aim is for the facility to hit full operating capacity by 2023 to produce 620,000 300 mm wafers per year. The companies will receive support from France due to the facilities contribution to the European Chips Act, the project is expected cost a total of $5.7 billion142. Additionally, ST Microelectronics has said it will continue its investments in its 300 mm manufacturing facility in Italy with full operating capacity to be available by 2025143. The development of these facilities in Europe will boost the European chip supply, playing into the EU Chips Act and establishing a more resilient supply chain of semiconductor chips. These investments are monumental for Europe and will support the green transition and the delivery of the European Green Deal118. 7.7.1.4 Semiconductor industry In addition to the sectors mentioned above, there are research and design facilities solely focused on advancing semiconductor technology located within Europe. These facilities may receive funding from the European Commission or invest in their projects with an annual R&D budget of up 500 million. The projects and research that takes place at these facilities helps achieve targets in projects such as Horizon 2020 and Horizon Europe. Semiconductors enable a smart, digital society and the research taking place at these institutes is at the forefront of Europe becoming climate neutral. 7.8 Wider implications: European strategic goals, consumers, and endusers 7.8.1 TeflonTM PFA Not only does Europe want to reduce its dependency on Russian fossil fuels144, but The European Green Deal145 sets out actions to transform Europe into becoming the first climate neutral continent by 2050. Semiconductors enable low carbon and energy efficient solutions through optimisation of energy generation and usage in transportation, manufacturing, consumer products and services146. This also includes the decarbonisation of the transportation sector that represents 25% of the EU's total greenhouse gas emissions147. By 2030, the plan aims to reduce emissions from cars by 55% and 141 https://electronics360.globalspec.com/article/18357/gf-and-st-to-build-new-300-mm-fab-in-france accessed November 2022 142 https://siliconangle.com/2022/07/11/stmicro-globalfoundries-build-5-7b-semiconductor-fab-france/ accessed November 2022 143 https://electronics360.globalspec.com/article/18357/gf-and-st-to-build-new-300-mm-fab-in-france accessed November 2022 144 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/repowereu-affordable- secure-and-sustainable-energy-europe_en accessed July 2022 145 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en accessed July 2022 146 https://www.eusemiconductors.eu/esia Sept 2021 brochure "European Semiconductor Industry: A strong contributor to reducing Carbon Emissions". 147 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/transport-and-green- deal_en accessed September 2022 SEA on TeflonTM PFA for Chemours APM RPA| 78 by 2035 emissions from cars will reach zero148, additionally The Sustainable and Smart Mobility Strategy149 will aim to have 30 million zero-emission cars in operation by 2030. To achieve this an increase in electricity powered vehicles is expected. To achieve these goals the 27 EU Member States have approved the end of internal combustion engine vehicles by 2035, this will ban the sale of new petrol and diesel cars150. Semiconductors used in vehicle networks and sensors can increase the fuel efficiency of vehicles due to weight reduction by replacing older heavier mechanical systems with lighter tech-based systems151. Automated and Advanced Driver Assistance Systems powered by semiconductors can reduce emissions through cruise control and autonomous driving. In fact, autonomous driving can reduce fuel consumption by up to 45%152 and would subsequently contribute to the UN social development goal of reducing fatalities from road traffic accidents. However, to achieve this also means doubling the amount of semiconductor chips used in vehicles to operate these fully electric systems. A typical electric vehicle contains twice the number of semiconductor chips than internal combustion engine vehicles. As electric vehicles evolve and become smarter, they will require more chips. Changes in semiconductor innovation has enabled electric vehicles to have a longer battery life as well as decreasing the cost of the vehicle itself. Newer types of semiconductors, such as silicon carbide and gallium nitride, are cheaper than the traditional silicon semiconductor chips. They have also been shown to improve battery life. An increase in electric vehicles would also mean an increase in charging stations to replenish a cars battery. Whether this is at a person's home, a store, or a rest stop along a motorway, semiconductor chips are essential to enable the fast charging of battery electric vehicles153. It was estimated in 2021 there were 376,000 publicly available electric vehicle charging stations in Europe. By 2025 it is estimated there will be 1.3 million and by 2030 it is estimated to grow to 2.9 million charging stations154. The Sustainable and Smart Mobility Strategy aims to install 3 million public charging points by 2030 to assist in boosting the uptake of zero-emission vehicles. Additionally, throughout Europe slow charging stations are gradually being replaced by ultra-fast chargers. The global electric vehicle market was valued at $163 billion in 2020 and is expected to reach $823.75 billion by 2030, demonstrating a CAGR of 18.2% through the predicted period155. In Europe, the market share of battery electric vehicles is expected to be 60% in Western Europe by 2030, this is equivalent to 8.4 million vehicles156. This growth is attributed to many countries looking to phase out internal combustion engine vehicles by 2035, so that all new cars placed on the market will be electric. Assisting The European Green Deal as well through smart electric grids that can reduce the CO2 emissions in building. Semiconductors used for power management are made from silicon carbide and gallium nitride allowing the conversion of power to more efficient. Additionally, semiconductors 148 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal/delivering-european-green- deal_en#making-transport-sustainable-for-all accessed September 2022 149 https://transport.ec.europa.eu/transport-themes/mobility-strategy_en accessed September 2022 150 https://www.cecra.eu/_files/ugd/35e449_2c9a0d98bf8e489e825586259e0f1968.pdf accessed September 2022 151 https://www.eusemiconductors.eu/esia Sept 2021 brochure "European Semiconductor Industry: A strong contributor to reducing Carbon Emissions" accessed September 2022 152 https://www.eusemiconductors.eu/esia Sept 2021 brochure "European Semiconductor Industry: A strong contributor to reducing Carbon Emissions" accessed September 2022 153 https://www.sme.org/technologies/articles/2021/september/semiconductor-devices-for-automobiles/ accessed September 2022 accessed July 2022 154 https://www.virta.global/en/global-electric-vehicle-market accessed September 2022 accessed July 2022 155 https://www.alliedmarketresearch.com/electric-vehicle-market accessed July 2022 156 https://www.forbes.com/sites/neilwinton/2021/12/31/booming-electric-car-sales-in-europe-may-soon- face-a-reality-check accessed September 2022 accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 79 can be used to lower the total energy consumption of a building by adapting the heating, ventilation, and air conditioning equipment to enable preference settings or sense human presence and activity157. Following the Covid-19 pandemic, the semiconductor industry experienced supply chain issues and increased demand for PCs leading to a global chip shortage158. Towards the end of 2020 as automobile production and demand increased the industry began to feel the impacts of the shortage, with multiple car manufacturers reporting up to 40% decreased production rates in 2021159. Additionally, the shift to more automated and electric vehicles has put a strain on the supply chain. However, this shortage is expected to resolve in late 2022. The European Chips Act160 is a strategy looking to increase Europe's current market share of semiconductors from 10% to 20% in 2030 to ensure the supply. This includes large investments in the development and manufacturing of systems and industrial production. As the world shifts to a more technological and digital era, the demand for semiconductor chips is expected to double by the end of the decade161 and ensuring Europe has its own reliable supply chain will be vital not only to the automotive industry but many others. 7.9 Summary The activities under review in this socio-economic analysis is the importation of TeflonTM PFA for sale into the semiconductor manufacturing supply chain, focussing on semiconductors in the automotive sector. This report has sought, where possible, to monetise and value the operations of both Chemours and the actors in these relevant supply chains. The RPA study team have estimated that under the continued use scenario, over the course of the assessment period between the start of 2026 and the close of 2035, the European market for TeflonTM PFA will provide substantial wealth for the European economy. Chemours APM will generate profits estimated between 117 and 353 million over the assessment period from the sale of TeflonTM PFA used in the semiconductor industry. They will also generate additional profits of between 176 and 353 million from the sale of TeflonTM PFA for other uses. This is caused by continued strong growth in the demand for semiconductors and the materials required to manufacture them. This strong growth is being caused by initiatives such as the European Chips Act which aims to increase European manufacturing capacity for semiconductors and increase its footprint in the global semiconductor market. Similarly, an increase in production and demand for new high efficiency and electric vehicles, will require more semiconductors. These market shifts are being driven by programs such as the ban on new internal combustion engines in 2035 and the European objective to reduce emissions by 55% for cars by 2030. TeflonTM PFA is not manufactured or processed by Chemours in Europe, therefore there are no emissions at Chemours' sites in Europe in relation to TeflonTM PFA activities. In addition, none or very limited emissions during use are expected due to the closed systems used in the manufacture of articles. TeflonTM PFA is mostly recycled at the end of life, but some material is still placed into landfilled at the end of life. However, due to the longevity of the product, the fate at the end of life in Europe when used in semiconductor fabs is not known. In landfill, TeflonTM PFA would not degrade and leaching of monomers or polymerisation aid is not of concern due to the low presence (<1 ppm). 157 https://www.eusemiconductors.eu/esia Sept 2021 brochure "European Semiconductor Industry: A strong contributor to reducing Carbon Emissions" accessed September 2022 158 https://www.techradar.com/uk/news/global-chip-shortage accessed July 2022 159 https://www.jpmorgan.com/insights/research/supply-chain-chip-shortage accessed July 2022 160 https://ec.europa.eu/commission/presscorner/detail/en/ip_22_729 accessed July 2022 161 https://aeneas-office.org/2022/02/09/european-chips-act-proposals-in-detail/ SEA on TeflonTM PFA for Chemours APM RPA| 80 The semiconductor supply chain assessed by the RPA study team consists of three market segments which were all assessed individually by the study team to determine the total value to the European economy. The markets within this supply chain are estimated to generate profits over the course of the assessment period of around 63.4 billion. This figure is also likely to be an underestimation of the true profits that will be generated by this industry due to the study teams use of average profit metric statistics from Eurostat and not true profit margins from actors within this supply chain. This SEA has also focussed on the use of semiconductors within the automotive industry and sought to quantify the benefit generated by this sector because of its' access to semiconductors. The motor vehicle manufacturing market has been estimated to generate profits of over 206 billion over the assessment period which again may be a slight underestimation in the true value returned by this sector given slight variances in profitability between actors in the market. It is assumed that European vehicle manufacturers will predominantly use European manufactured chips for a shorter more stable supply; and given the essentiality of chips in modern vehicles it can be assumed that 100% of this estimated income is dependent on the continued access to semiconductors and integrated circuits. Therefore, the continued use scenario allows for economic benefits of 63.4 billion to be directly generated from the sale and use of TeflonTM PFA. This allows the automotive market to generate economic benefits of over 206 billion as a result of the use of semiconductors, whose manufacturing process is dependent on TeflonTM PFA. TeflonTM PFA has no known human health effects and no known environmental hazards and is not classified as PBT. It is however a persistent substance, and this level of persistency is evaluated in terms of emission levels. Due to no health and environmental hazards being present there are no associated health and environmental costs under the continued use scenario. The presented markets are generators of substantial employment and employment value for the European economy. Chemours APM by the start of the assessment period will employ around 629 staff across the EU. The semiconductor industry is estimated to employ nearly 20,000 staff and finally the automotive sector employs over 1.14 million individuals across the continent. TeflonTM PFA is therefore directly attributable to just under 21,000 jobs across Europe, with this set to grow substantially over the assessment period and it is a main contributing factor to a further 1.14 million jobs. At present Chemours APM have a diverse range of projects in their research and development portfolio across several sites within Europe. APM over the assessment will spend nearly 91 million on fluoropolymer related alternative R&D. It should be noted that this spending is not to develop alternatives to fluoropolymers but instead alternative forms of fluoropolymers. In addition to this they are also set to spend an additional 190 million on operational R&D to develop and improve their manufacturing processes and logistics chains. This level of spending is only possible under the continued use scenario as without the sale of fluoropolymers products such as TeflonTM PFA there would be no business operation to fund the projects they are conducting. Downstream users in the semiconductor supply chain and automotive sector are not spending R&D budgets on the development of new alternatives to fluoropolymers and TeflonTM PFA. They are however conducting operational R&D spending to again improve their processes and efficiency as best they can. In addition to this semiconductor manufacturers are planning to make investments worth tens to hundreds of billions of Euros into the establishment of new production capacity within Europe such as Intel's initial plans to invest over 80 billion across several Member States. Finally, as well as generating substantial value in terms of profits generated and high levels of well- paid employment the TeflonTM PFA market and its downstream users are essential to the achievement of critical EU objectives and strategies. A total of five European objectives, directives and strategies were identified as being dependent on the TeflonTM PFA market in some capacity. Policies such as the SEA on TeflonTM PFA for Chemours APM RPA| 81 European Green Deal, sustainable and mart mobility strategy, fit-for-55, EU industrial strategy and the European Chips Act are dependent on semiconductors and therefore dependent on the supply of TeflonTM PFA. The European Chips Act and the EU industrial strategy are focused on the development and improvement of the semiconductor industry within Europe and access to TeflonTM PFA to produce manufacturing equipment under the continued use scenario is essential to this. Electric vehicles are even more dependent on semiconductors than internal combustion engine vehicles and as such due to electric vehicles being essential components to the success of the Green Deal, fit-for-55 strategy, and sustainable and smart mobility strategy these policies success is also highly dependent on continued access to semiconductors under the continued use scenario. Therefore, overall access to TeflonTM PFA under the continued use scenario will permit great value to be generated and distributed across Europe but also for key strategic aims to be achieved without harming the environment or human health. SEA on TeflonTM PFA for Chemours APM RPA| 82 8 Nonuse scenario 8.1 Introduction This section outlines the non-use scenario for the APM division of Chemours and its downstream users in relation to the import, export, sale, and use of fluoropolymers. There are many different forms a non-use or restriction scenario can take due to various conditions that can be laid out in a restriction proposal. These conditions can range from a total restriction on the manufacture and sale of a chemical product to limitations on the concentrations used during the manufacturing process or present in finished articles. The non-use scenario that has been assumed by the RPA study team is one of a total restriction (ban) on the import, manufacture, sale, and use of fluoropolymers within the EU27/EEA. It is therefore assumed for the purposes of this assessment that from the start of 2025 APM will have 6 months to phase out and cease their import, and manufacture of all fluoropolymer products in Europe with a further 6 months to sell all remaining stocks. This situation will also apply to the downstream customers of APM, who will also have 6 months to scale down and cease the purchase and use of fluoropolymers with a further 6 months to sell their remaining stocks of articles containing fluoropolymers. Therefore, the first year of no fluoropolymer related activities is assumed to be 2026 and this is the year for which first year losses are calculated and presented. This non-use scenario was chosen due to it being the most extreme option possible under a REACH restriction. Therefore, utilisation of this scenario allows the RPA study team to present the worst-case scenario for both Chemours APM and the European economy. Other, less extreme, restriction situations may result in less damage being suffered by the European economy, but it should also be noted that many restriction conditions such as limits on permitted concentrations of fluoropolymers would also equate to de-facto ban on fluoropolymer usage within the EU27/EEA given the way in which the material is utilised. The results presented under this most extreme of restriction scenarios are therefore representative of the outcomes APM and the European economy would face under many different variations of restriction. The non-use scenario will be the mirror image to the continued use scenario discussed in Section 6, thereby meaning this section will continue to focus on the import and sale of TeflonTM PFA for use within the manufacture of fluid handling/chemical distribution equipment used in the manufacture of semiconductors. The information presented in this section will be specific to the end uses of TeflonTM PFA supplied by APM but there will also be higher level generalisations and extrapolations to the wider context of these markets alongside discussion of impacts on other markets related to the in-scope markets. The timeline for the assessment of the impacts suffered under the non-use scenario is a 10-year period from 2026 to 2035. This timeline has been used by the RPA study team due to the current lack of suitable and scalable alternatives to fluoropolymers in the applications being assessed and the time horizons that will be required to develop new materials. With regards to TeflonTM PFA, the same assessment period timeline of 10 years is also being applied to assess the impacts to the European economy of this sector not having access to fluoropolymers. However, it could be argued that an even longer timeframe could justifiably be applied to the semiconductor sector and semiconductor related uses of fluoropolymers. This is because the current processes of the sector are so dependent on fluoropolymers, like TeflonTM PFA, that a restriction on them would not just require manufacturing adjustments to be made but for the entire process of designing, and manufacturing semiconductors to be reinvented from the ground up. It has taken the industry upwards of 45 years to invent, develop, and continually improve the semiconductor manufacturing process, in which TeflonTM PFA is designed in as an integral part. Therefore, in theory given the lack of alternatives and the damning impacts a SEA on TeflonTM PFA for Chemours APM RPA| 83 restriction would have on a highly IP protected and specialised industry, a timeframe of 40 to 50 years could justifiably be applied under ECHA SEAC restriction guidance162163. To this end the losses related to TeflonTM PFA and the semiconductor industry presented in this assessment could be considered an underestimation by a factor of 4 to 5 times but the damages to the economy related to this sector within this assessment serve as a founded foundation for understanding the impacts Europe will face in the wake of a wide-ranging fluoropolymer restriction. 8.2 Import and profit losses 8.2.1 TeflonTM PFA import and profit losses Under the assumed non-use scenario, the import of TeflonTM PFA for use within the semiconductor industry and all other uses will be reduced to zero tonnes per year. Therefore, meaning that over the assessment period instead of between 7,732 and 9,272 tonnes of TeflonTM PFA being imported for further use, nothing will be brought into the EU. Likewise, the size of the market these imports supply will be reduced to zero as the entire fluoropolymer market related to semiconductors will be wiped- out within Europe and no profits will be generated by Chemours APM to return to the economy. In fact, given that Chemours APM only deals in fluoropolymer materials a restriction of such a prohibitive nature would see the total closure of Chemours APM within Europe. As a result of this the volume, revenue and profit estimated and presented in section 7.2.1 above would all be lost under the non- use scenario. Over the course of the assessment period therefore, under the non-use scenario the European economy will lose the semiconductor associated market with TeflonTM PFA causing a market value decline of between 169 and 508 million. The true losses that will be realised by the European economy and Chemours APM will come from the lost profits that will occur. Therefore, meaning the European economy and Chemours APM over the assessment period will suffer estimated losses of between 117 and 353 million. In addition to these losses related to TeflonTM PFA use in the semiconductor industry an extra 176 to 353 million in lost profits will also be inflicted on the European economy and Chemours APM once additional uses of TeflonTM PFA are accounted for. A grand total of between 294 and 706 million in lost profits will be incurred as a direct result of a restriction being placed on TeflonTM PFA which is a substantial number of lost profits for the European economy to suffer from just the prohibited sales of TeflonTM PFA which is at the very beginning of the supply chain. The additional implications of a restriction on the supply chain are discussed in more detail in section 8.4 but a restriction on TeflonTM PFA and fluoropolymers in general will result in the collapse of the semiconductor industry within Europe to the point that semiconductors would not be permitted to be manufactured within the EU27 which would have overwhelming negative implications for the continent as no technology would be able to function without semiconductor chips. The financial losses of Chemours APM are but the thin end of wedge with regards to the negative impacts a fluoropolymer restriction would have for Europe when considering the semiconductor industry. 8.3 Emissions Because there are no viable alternative materials to replace TeflonTM PFA in the semiconductor manufacturing industry, it is difficult to determine what the waste management and end of life would like under a non-use scenario. It is estimated that components made from TeflonTM PFA will be phased out and replaced therefore these components are likely to be landfilled or incinerated. See Section 162 RDDS - Batch Process 0.9 (europa.eu) accessed July 2022 163 https://echa.europa.eu/documents/10162/0/afa_seac_surplus-loss_seac-52_en.pdf/5e24c796-d6fa-d8cc- 882c-df887c6cf6be?t=1633422139138 accessed July 2022 SEA on TeflonTM PFA for Chemours APM RPA| 84 8.5.2 for estimated environmental impacts under a non-use scenario in which alternative plastics are used. Under a scenario where TeflonTM PFA can no longer be imported and used within Europe, no emissions are expected to take place from the use of PFA. Emissions from disposal of legacy products could still take place. It is not known what the regulatory constraints on these would be and emissions from legacy products are not assessed. 8.4 Value of downstream markets In the event of a non-use scenario where TeflonTM PFA and fluoropolymers in general are restricted for use, not only would the semiconductor industry be greatly impacted but several businesses reliant on semiconductors would also be affected. It is well-known that any electronic device will use some sort of semiconductor chip, integrated circuit, or transistor, therefore it can be assumed that all electronic and technology sectors will be impacted to some degree. Fluoropolymers are a high value market, and due to their use in a wide variety of electronic components they enable around 50% of European Gross Domestic Product (GDP)164. Therefore, it can be assumed that 50% of Europe's GDP will be affected if fluoropolymers are restricted. 8.4.1 PFA in semiconductors 8.4.1.1 Moulders and converters Based on information gathered during consultation, it can be concluded that in a non-use scenario, enterprises operating as moulders and converters using TeflonTM PFA would likely be forced to close their business. With no alternatives being available to replace TeflonTM PFA, there would likely be increased research into other materials. However, with no guarantee that these materials will be adequate for use in this industry it is expected that moulder and converter businesses would not be able to survive the research period. Additionally, if research was not able to find an alternative to continue generating ultra-pure components to be used in semiconductor manufacturing equipment, this market would no longer have a viable business and would be entirely removed from Europe. In the short term the number of components being manufactured in Europe and the profits and wealth generated by this section explained in Section 7.4.1.1 would be lost. That is, the estimated revenue of between 2.6 and 3.1 billion and the related profits of between 252 and 308 million would be lost. 8.4.1.2 Wet processing equipment manufacturers All the players in the supply chain are reliant on one another and impacts on one market will be felt throughout the supply chain. Therefore, if moulders and converters were forced to shut down because businesses no longer received TeflonTM PFA resin to produce components needed in semiconductor process equipment, then it can be assumed equipment manufacturers would also likely close their businesses. While it was indicated by some downstream users that they would likely relocate their business outside Europe this would be costly and time consuming to build these large high-tech facilities. This portion of the market would be removed from Europe along with the estimated revenue of 240.6 billion and the related profits of 30.1 billion would be lost from the European economy. 164 https://www.semi.org/sites/semi.org/files/2020-12/SEMI%20Chemical%20Watch%20Presentation.pdf SEA on TeflonTM PFA for Chemours APM RPA| 85 8.4.1.3 Fabrication plant owners Not only do fabrication plants produce chips enabling the use of modern technology, but they also provide significant amounts of highly skilled jobs and profits to the economy. Without the use of TeflonTM PFA semiconductor chips could no longer be manufactured. This will have large knock-on effects to other industries including automotive/transportation, communication, and clean energy to name a few. Some fabrication plants may be able to afford to continue doing research to develop a process where the same quality chips could be manufactured in another manner. However, this would be an extremely lengthy process and a positive outcome is not promised. Therefore, most fabrication plants would either shut down or relocate their business outside of Europe. Relocation would be extremely costly to a business; it is estimated to cost 15 billion to set up a new fabrication plant165. Not only would this cost the European economy an estimated revenue of 231 billion and the related profits of 33.1 billion, but Europe's semiconductor chip share would decrease despite efforts to increase it to 20% global market share. 8.4.1.4 Other market implications The impact of the non-use scenario on the automotive industry is slightly more nuanced. When considering TeflonTM PFA alone in the context of the above outlined non-use scenario, the result of a restriction is the total collapse of the semiconductor manufacturing sector within Europe. This will mean that European car manufacturers will be fully reliant on chip imports and cannot rely on Europe's supply of semiconductor chips. This is because TeflonTM PFA is not present in the finished chip; and would not be subject to a restriction in Europe (when only considering TeflonTM PFA). Therefore, while the semiconductor manufacturing sector in Europe would collapse, the automotive sector would not be expected to suffer financial loses as they would be able to continue importing chips and manufacturing cars. Assuming that the global supply of chips is able to supply the European automotive sector, the move to 100% reliance on chip imports for the automotive sector, among others, would be highly damaging for Europe. This would cause a worsening of the European balance of payments (the difference between the value of European exports and imports). In addition, there would be substantial security concerns around the stability of global supply chains and political pressures around which nations would supply the European market. While the automotive sector would still contribute 206 billion in profits under the non-use scenario, when only consider TeflonTM PFA, the European economy would still face a substantial balance of trade and security difficulties. However, the implications of a group restriction on fluoropolymers should also be considered for the semiconductor supply chain and European automotive industry. As previously mentioned, no TeflonTM PFA is present on a finished semiconductor chip, but during the consultation stage of this study it was gathered that many other fluoropolymers are used throughout the semiconductor supply chain. Some of these are present in the finished chips themselves and their packaging. Therefore, when considering a wider fluoropolymer restriction, as outlined in the introduction to this section, imports of semiconductors containing any fluoropolymers would become restricted. This could mean European car manufacturers would not be able to produce and sell vehicles in Europe. It can be concluded that a wider fluoropolymer ban would result in cessation of both the European semiconductor industry and automotive industry. The resulting unemployment and social costs of this are discussed later in section 8.6.2.4 but are considered to be substantial and damaging to the European economy. In terms of economic impacts however as presented in section 7.4.1.4 a nonuse scenario, when considering a wider fluoropolymer restriction, will result in over 117 million motor vehicles, both internal combustion engine and electric vehicles, no longer being manufactured within Europe. The result of this would be a loss of over 3.2 trillion in profits and produce economic 165 https://www.semi.org/sites/semi.org/files/2020-12/SEMI%20Chemical%20Watch%20Presentation.pdf SEA on TeflonTM PFA for Chemours APM RPA| 86 losses of over 206 billion. A total of 1,890 enterprises in Europe would also cease trading and close across the entire European Union. 8.5 Health and environmental impacts 8.5.1 Health impacts Based on the information available and since there is no production within the EU of TeflonTM PFA, health hazards are not of concern. Therefore, the health impacts under a continued use scenario have not been calculated, thus no health impacts are expected also under a non-use scenario. 8.5.2 Environmental impacts Based on the information available to date, the environmental concerns for TeflonTM PFA relate to its persistency. Therefore, the environmental impacts under a continued use scenario have not been calculated, thus no environmental impacts are expected also under a non-use scenario. 8.6 Unemployment 8.6.1 Chemours APM As previously outlined in Section 7.6 by 2035, when a potential restriction may be adopted, there will be a total of 629 full time equivalent employees employed because of Chemours APMs fluoropolymer operations within the EU. These employees are located across Europe at several sites and during consultation with APM it was disclosed that all these staff would face redundancy in the event of a fluoropolymer restriction under REACH coming into effect. The SEAC guidance for assessing the cost and impact of unemployment is based on calculating the social cost of unemployment. This social cost is calculated according to the multiplication of the number of the employees who will lose their jobs, their average salary, and a ratio of social cost per job lost as calculated in Dubourg's (2016) paper. Table 8-1 presents this information and displays the calculated social cost of unemployment which will be suffered, due to a fluoropolymer restriction, by the European economy broken down by each separate Member State which will be affected. It should be noted that the figures presented in the final total social cost column have all been rounded to three significant figures for clarity. Table 8-2 also presents the same calculation but conducted instead using new social cost ratios which the RPA study team have recalculated using the same methodology of Duboug but utilising updated data sets and literature around recruitment costs. Table 81: Estimated Chemours APM Social Cost of Unemployment - original social cost ratios Country Number of Employees Average Salary () Portion of workers being made redundant Dubourg ratio of social cost per job lost Total social cost of unemployment () Netherlands 464.9 70,000 100% 2.35 76,500,000 Belgium 76.2 70,000 100% 3.03 16,200,000 France 66.3 70,000 100% 3.17 14,700,000 Spain 15 70,000 100% 2.80 2,940,000 Germany 5.7 70,000 100% 2.60 1,040,000 Denmark 1 70,000 100% 1.75 123,000 Source: APM personal communication 2022 and RPA study team analysis SEA on TeflonTM PFA for Chemours APM RPA| 87 Table 82: Estimated Chemours APM Social Cost of Unemployment - new social cost ratios Country Number of Employees Average Salary () Portion of workers being made redundant Dubourg ratio of social cost per job lost Total social cost of unemployment () Netherlands 464.9 70,000 100% 3.16 103,000,000 Belgium 76.2 70,000 100% 3.86 20,600,000 France 66.3 70,000 100% 3.43 15,900,000 Spain 15 70,000 100% 3.83 4,020,000 Germany 5.7 70,000 100% 3.33 1,330,000 Denmark 1 70,000 100% 2.07 145,000 Source: APM personal communication 2022 and RPA study team analysis The unemployment generated from cessation of Chemours APMs operations will generate total social costs in the order of over 111 million for the European economy under original social cost ratios and 145 million under new social cost ratios. This is a considerable cost for the economy to suffer on top of the losses of output and profits from APM as outlined in previous sections. Not only that but some European nations will be more adversely affected than others. Member states such as Germany and Denmark will not see significant levels of unemployment with only 5.7 people and 1 person being made unemployed respectively. These low numbers of unemployment and low social costs will be easily absorbed by their respective economies and local communities. The Netherlands however will suffer much greater impacts because of a potential fluoropolymer restriction. Most of the APM staff on payroll are positioned within the Netherlands and losing 465 employees on an average wage of 70,000 will produce social costs of 76.5 million for the Dutch economy. These are heavy losses to incur and such a high quantity of people losing their jobs from a single site closing will also have resounding local implications. A high concentration of unemployment occurring at the Dordrecht site will most likely see economic scaring occur throughout the local economy as the level of consumption falls as wages are no longer paid which will result in a second wave of unemployment and substantial effort would need to be made at the macro level to prevent a substantial negative multiplier effect taking hold on unemployment in the region. It would therefore be very damaging and unfair in economic terms to implement a fluoropolymer restriction on TeflonTM PFA (given that is so adversely affects certain Member States over others. 8.6.2 Semiconductor industry and automotive 8.6.2.1 Moulders and converters It was confirmed during consultation that moulders and converters within Europe supply various components made from TeflonTM PFA and other fluoropolymers to semiconductor equipment manufacturers for use in semiconductor chip manufacturing. Under a non-use scenario there would be a closure and complete loss of revenue for businesses solely reliant on fluoropolymers. There are currently no alternatives being considered and therefore RPA has assumed 100% unemployment for moulder and converter businesses using TeflonTM PFA. The RPA study team have used the previously stated known levels of employment within the moulders and converters market to calculate the social costs of the unemployment caused by moulders and converters ceasing operations. SEA on TeflonTM PFA for Chemours APM RPA| 88 Table 83: Estimated social cost of unemployment from semiconductor equipment manufacturers - original social cost factors Portion of Number of workers being Social cost Social cost of staff made Average wage made ratio of unemployment Member State unemployed () redundant unemployment () Austria 120 67,200 100% 2.41 19,400,000 Germany 300 58,100 100% 2.60 45,300,000 Germany 10 45,000 100% 2.60 1,170,000 Germany 39 41,000 100% 2.60 4,160,000 Total 469 70,030,000 Source: RPA study team analysis While this is considered an underestimation of the social costs of unemployment, based on the data above it can be assumed that Germany will largely feel the impacts accounting for 50.63 million of the total 70 million cost of unemployment. Table 84: Estimated social cost of unemployment from semiconductor equipment manufacturers - new social cost factors Portion of Number of workers being Social cost Social cost of staff made Average wage made ratio of unemployment Member State unemployed () redundant unemployment () Austria 120 67,200 100% 3.16 25,400,000 Germany 300 58,100 100% 3.33 58,000,000 Germany 10 45,000 100% 3.33 1,500,000 Germany 39 41,000 100% 3.33 5,320,000 Total 469 90,220,000 Source: RPA study team analysis Table 8-3 above presents the information used to calculate the social cost of unemployment using the original 2016 Dubourg social cost ratios and Table 8-4 presents the same information but conducts the same calculation using RPA's update Dubourg social cost ratios. These calculations show that under the original cost ratios the social cost of known moulders and converters unemployment is estimated to be just over 70 million. This figure increases when the updated social cost ratios calculated by RPA are applied with the social cost of unemployment of moulders and converters rising to over 90 million. 8.6.2.2 Wet process equipment manufacturers Although semiconductor equipment manufacturers are not direct users of TeflonTM PFA, without it there would not be a viable business model. Fluoropolymers, more specifically TeflonTM PFA, are critical to the manufacture of semiconductor equipment. While there are currently no viable alternatives on the market, the RPA study team has assumed either a business relocation outside Europe or business closure under a non-use scenario. The RPA study team used the previously used employment figures obtained through Eurostat to determine the social costs of unemployment of semiconductor equipment manufacturers ceasing operations. Data appended with an asterisk are where the European Union 27 average has been used, due to these countries reporting insufficient data to Eurostat. SEA on TeflonTM PFA for Chemours APM RPA| 89 Table 85: Estimated social cost of unemployment from semiconductor equipment manufacturers - original social cost factors Member State Number of staff made unemployed Average wage () Social cost ratio of unemployment Social cost of unemployment () Austria 382 68,600 2.41 63,200,000 Belgium 74 63,900 3.03 14,400,000 Bulgaria 58 11,400 2.63 1,750,000 Croatia 19 19,100 2.76 1,020,000 Cyprus - - 2.07 0 Czechia 302 23,500 2.74 19,400,000 Denmark 153 68,700 1.75 18,400,000 Estonia 43 2.67 6,310,000 Finland 149 57,500 2.15 18,500,000 France 266 62,000 3.17 52,300,000 Germany 4,852 58,800 2.6 742,000,000 Greece 23 27,700 3.34 2,110,000 Hungary 166 19,900 2.75 9,100,000 Ireland - - 2.45 0 Italy 850 54,400 3.03 140,000,000 Latvia 10 22,400 2.54 581,000 Lithuania 11 19,100 2.75 558,000 Luxembourg 2 1.63 145,000 Malta - - 2.03 0 Netherlands 653 92,600 2.35 142,000,000 Poland 344 17,300 2.35 14,000,000 Portugal 138 23,000 2.83 8,990,000 Romania 135 14,800 2.39 4,770,000 Slovakia 81 20,600 3.51 5,820,000 Slovenia 55 33,900 2.47 4,640,000 Spain 293 44,500 2.8 36,500,000 Sweden 176 61,900 2.23 24,300,000 Total 9,235 1,330,000,000 Source: RPA study team analysis Table 8-5 above presents the information used to calculate the social cost of unemployment using the original 2016 Dubourg social cost ratios and Table 8-6 presents the same information but conducts the same calculation using RPA's update Dubourg social cost ratios. These calculations show that under the original cost ratios the social cost of known semiconductor equipment manufacturer unemployment is estimated to be just over 1.3 billion. Similarly, to moulders and converters, Germany will feel this impact greater than any other Member State accounting for 742 million of the social unemployment costs. Table 86: Estimated social cost of unemployment from semiconductor equipment manufacturers - new social cost factors Member State Austria Belgium Bulgaria Croatia Cyprus Czechia Denmark Number of staff made unemployed 382 74 58 19 - 302 153 Average wage () 68,600 63,900 11,400 19,100 - 23,500 68,700 Social cost ratio of unemployment 3.2 3.9 3.5 3.0 2.8 3.1 2.1 Social cost of unemployment () 82,800,000 18,300,000 2,330,000 1,090,000 0 22,200,000 21,800,000 SEA on TeflonTM PFA for Chemours APM RPA| 90 Table 86: Estimated social cost of unemployment from semiconductor equipment manufacturers - new social cost factors Number of staff Member State made unemployed Estonia 43 Finland 149 France 266 Germany 4,852 Greece 23 Hungary 166 Ireland - Italy 850 Latvia 10 Lithuania 11 Luxembourg 2 Malta - Netherlands 653 Poland 344 Portugal 138 Romania 135 Slovakia 81 Slovenia 55 Spain 293 Sweden 176 Total 9,237 Source: RPA study team analysis Average wage () 55,500* 57,500 62,000 58,800 27,700 19,900 - 54,400 22,400 19,100 55,500* - 92,600 17,300 23,000 14,800 20,600 33,900 44,500 61,900 Social cost ratio of unemployment 3.0 2.8 3.4 3.3 4.5 2.6 2.6 4.6 3.1 3.1 3.0 2.1 3.2 2.5 3.6 4.1 4.0 3.2 3.8 2.8 Social cost of unemployment () 7,000,000 23,700,000 56,600,000 950,000,000 2,820,000 8,450,000 0 213,000,000 703,000 632,000 266,000 0 191,000,000 15,000,000 11,600,000 8,150,000 6,620,000 6,000,000 50,000,000 30,800,000 1,730,000,000 This figure increases when the updated social cost ratios calculated by RPA are applied with the social cost of unemployment of semiconductor equipment manufacturers rising to over 1.7 billion. 8.6.2.3 Fabrication plant owners During consultation it was determined that without fluoropolymers or TeflonTM PFA the manufacture and production of semiconductor chips would not be possible. Due to no alternatives being available, it is determined that under a non-use scenario, fabrication plants would be forced to cease operations resulting in a complete shutdown of their business. The RPA study team used the previously used employment figures obtained through Eurostat to determine the social costs of unemployment of fabrication plants ceasing operations. Data appended with an asterisk are Data appended with an asterisk where the European Union 27 average has been used, due to these countries reporting insufficient data to Eurostat. Table 87: Estimated social cost of unemployment from semiconductor manufacturers - original social cost factors Member Number of staff Average wage Social cost ratio Social cost of State made unemployed () of unemployment unemployment () Austria 427 85,400 2.41 88,000,000 Belgium 154 74,800 3.03 35,000,000 Bulgaria 49 13,000 2.63 1,660,000 Croatia 29 12,900 2.76 1,030,000 Cyprus 0 - 2.07 0 Czechia 376 21,700 2.74 22,300,000 Denmark 32 68,900 1.75 3,830,000 Estonia 37* 55,700* 2.67 5,440,000 SEA on TeflonTM PFA for Chemours APM RPA| 91 Table 87: Estimated social cost of unemployment from semiconductor manufacturers - original social cost factors Member Number of staff Average wage Social cost ratio Social cost of State made unemployed () of unemployment unemployment () Finland 84 56,900 2.15 10,300,000 France 1,139 73,400 3.17 265,000,000 Germany 3,936 72,000 2.6 737,000,000 Greece 24 32,600 3.34 2,650,000 Hungary 537 15,700 2.75 23,200,000 Ireland - - 2.45 0 Italy 1,278 53,300 3.03 206,000,000 Latvia 22 55,700* 2.54 3,130,000 Lithuania 31 15,900 2.75 1,370,000 Luxembourg 0 - 1.63 0 Malta - - 2.03 0 Netherlands 297 55,700* 2.35 38,900,000 Poland 687 16,100 2.35 26,000,000 Portugal 67 24,000 2.83 4,530,000 Romania 794 55,700* 2.39 106,000,000 Slovakia 164 18,000 3.51 10,400,000 Slovenia 66 24,700 2.47 4,010,000 Spain 356 40,600 2.8 40,500,000 Sweden 109 59,900 2.23 14,600,000 Total 10,695 1,650,000,000 Source: RPA study team analysis Table 8-7 above presents the information used to calculate the social cost of unemployment using the original 2016 Dubourg social cost ratios and Table 8-8 presents the same information but conducts the same calculation using RPA's update Dubourg social cost ratios. These calculations show that under the original cost ratios the social cost of known fabrication plant unemployment is estimated to be just over 1.6 billion. As previously mentioned in the other two sectors, Germany will again be burdened from the shutdown of fabrication plants accounting for 737 million of the social unemployment costs. Table 88: Estimated social cost of unemployment from semiconductor manufacturers - new social cost factors Number of staff Social cost ratio of Social cost of Member State made unemployed Average wage () unemployment unemployment () Austria 427 85,400 3.2 115,000,000 Belgium 154 74,800 3.9 44,500,000 Bulgaria 49 13,000 3.5 2,210,000 Croatia 29 12,900 3.0 1,110,000 Cyprus 0 - 2.8 0 Czechia 376 21,700 3.1 25,500,000 Denmark 32 68,900 2.1 4,520,000 Estonia 37* 55,700* 3.0 6,030,000 Finland 84 56,900 2.8 13,200,000 France 1,139 73,400 3.4 286,000,000 Germany 3,936 72,000 3.3 943,000,000 Greece 24 32,600 4.5 3,540,000 Hungary 537 15,700 2.6 21,500,000 Ireland - - 2.6 0 Italy 1,278 53,300 4.6 313,000,000 Latvia 22 55,700* 3.1 3,790,000 SEA on TeflonTM PFA for Chemours APM RPA| 92 Table 88: Estimated social cost of unemployment from semiconductor manufacturers - new social cost factors Number of staff Social cost ratio of Social cost of Member State made unemployed Average wage () unemployment unemployment () Lithuania 31 15,900 3.1 1,550,000 Luxembourg 0 - 3.0 0 Malta - - 2.1 0 Netherlands 297 55,700* 3.2 52,400,000 Poland 687 16,100 2.5 27,800,000 Portugal 67 24,000 3.6 5,830,000 Romania 794 55,700* 4.1 181,000,000 Slovakia 164 18,000 4.0 11,800,000 Slovenia 66 24,700 3.2 5,180,000 Spain 356 40,600 3.8 55,400,000 Sweden 109 59,900 2.8 18,400,000 Total 10,695 2,140,000,000 Source: RPA study team analysis This figure increases when the updated social cost ratios calculated by RPA are applied with the social cost of unemployment of fabrication plant employees rising to over 2.1 billion. 8.6.2.4 Other market implications As previously stated in section 8.4.1.4 finished semiconductors do not contain TeflonTM PFA and as such could continue to be imported into Europe. Thus, permitting the manufacture of internal combustion engine and electric vehicles to continue meaning there would be no loss of employment from the automotive sector. This would only be the case however when considering the impacts of a restriction on TeflonTM PFA in isolation from a wider fluoropolymer ban. When considering the non-use scenario assumed under this SEA work in the context of a wider fluoropolymer ban however the impact on European automotive manufacturing employment is very different. The total cessation of the semiconductor manufacturing industry within Europe will leave motor vehicle manufacturers with no access to semiconductor chips. As a result of this the entire automotive sector in Europe would collapse as well as modern day vehicles cannot be produced without semiconductor chips which will lead to the total loss of all 1.14 million employees within this sector. The RPA have used these unemployment figures to calculate the social cost of unemployment to European society based on original Dubourg social cost ratios and new social cost ratios which were calculated by the study team using the same methodology as Dubourg from 2016. These calculations and their results are presented in the following two tables (Table 8-9 and Table 8-10). Table 89: Estimated social cost of unemployment from motor vehicle manufacturers - original social cost factors Portion of Dubourg workers being ratio of Number of Average salary made social cost Total social cost of Country employees () redundant per job lost unemployment () Austria 19,721 76,300 100% 2.41 3,630,000,000 Belgium 16,578 64,800 100% 3.03 3,250,000,000 Bulgaria 33 4,700 100% 2.63 408,000 Croatia 405 20,500 100% 2.76 22,900,000 Cyprus - 77,100 100% 2.07 - Czechia 45,085 35,500 100% 2.74 4,390,000,000 Denmark 12,445 77,100 100% 1.75 1,680,000,000 SEA on TeflonTM PFA for Chemours APM RPA| 93 Table 89: Estimated social cost of unemployment from motor vehicle manufacturers - original social cost factors Portion of Dubourg workers being ratio of Number of Average salary made social cost Total social cost of Country employees () redundant per job lost unemployment () Estonia 6,519 77,100 100% 2.67 1,340,000,000 Finland 5,867 44,500 100% 2.15 561,000,000 France 117,013 68,500 100% 3.17 25,400,000,000 Germany 580,264 96,400 100% 2.60 145,000,000,000 Greece 83 25,300 100% 3.34 7,030,000 Hungary 22,984 30,900 100% 2.75 1,950,000,000 Ireland 161 38,600 100% 2.45 15,200,000 Italy 62,381 54,800 100% 3.03 10,400,000,000 Latvia 430 77,100 100% 2.54 84,200,000 Lithuania 282 20,200 100% 2.75 15,700,000 Luxembourg - 77,100 100% 1.63 - Malta - 77,100 100% 2.03 - Netherlands 13,853 65,700 100% 2.35 2,140,000,000 Poland 38,732 26,200 100% 2.35 2,380,000,000 Portugal 8,237 33,700 100% 2.83 786,000,000 Romania 21,457 77,100 100% 2.39 3,950,000,000 Slovakia 25,448 33,400 100% 3.51 2,980,000,000 Slovenia 4,082 77,100 100% 2.47 777,000,000 Spain 71,859 52,400 100% 2.80 10,500,000,000 Sweden 69,197 80,600 100% 2.23 12,400,000,000 Total 1,143,113 233,659,438,000 Source: RPA study team analysis Table 810: Estimated social cost of unemployment from motor vehicle manufacturers - new social cost factors Portion of Dubourg workers being ratio of Number of Average salary made social cost Total social cost of Country employees () redundant per job lost unemployment () Austria 19,721 76,300 100% 3.16 4,750,000,000 Belgium 16,578 64,800 100% 3.86 4,140,000,000 Bulgaria 33 4,700 100% 3.50 543,000 Croatia 405 20,500 100% 2.95 24,500,000 Cyprus - 77,100 100% 2.85 - Czechia 45,085 35,500 100% 3.12 5,000,000,000 Denmark 12,445 77,100 100% 2.07 1,980,000,000 Estonia 6,519 77,100 100% 2.96 1,490,000,000 Finland 5,867 44,500 100% 2.76 720,000,000 France 117,013 68,500 100% 3.43 27,500,000,000 Germany 580,264 96,400 100% 3.33 186,000,000,000 Greece 83 25,300 100% 4.46 9,380,000 Hungary 22,984 30,900 100% 2.55 1,810,000,000 Ireland 161 38,600 100% 2.64 16,400,000 Italy 62,381 54,800 100% 4.60 15,700,000,000 Latvia 430 77,100 100% 3.07 102,000,000 Lithuania 282 20,200 100% 3.12 17,700,000 Luxembourg - 77,100 100% 2.98 - SEA on TeflonTM PFA for Chemours APM RPA| 94 Table 810: Estimated social cost of unemployment from motor vehicle manufacturers - new social cost factors Portion of Dubourg workers being ratio of Number of Average salary made social cost Total social cost of Country employees () redundant per job lost unemployment () Malta - 77,100 100% 2.09 - Netherlands 13,853 65,700 100% 3.16 2,880,000,000 Poland 38,732 26,200 100% 2.51 2,550,000,000 Portugal 8,237 33,700 100% 3.64 1,010,000,000 Romania 21,457 77,100 100% 4.08 6,750,000,000 Slovakia 25,448 33,400 100% 3.99 3,390,000,000 Slovenia 4,082 77,100 100% 3.20 1,010,000,000 Spain 71,859 52,400 100% 3.83 14,400,000,000 Sweden 69,197 80,600 100% 2.82 15,700,000,000 Total 1,143,113 296,950,523,000 Source: RPA study team analysis As seen in the above tables under the non-use scenario only when considering a wider group restriction, the level of unemployment estimated to occur within the automotive sector is estimated to incur social costs of over 233 billion under original 2016 social cost ratios. Under the RPA updated social cost ratios however the social cost of unemployment under the non-use scenario increases to over 296 billion. 8.7 Innovation and investment losses As referenced in Section 7.7 APM currently make substantial investments each year of 40.7 million into the development of their fluoropolymer businesses efficiency and alternative more advanced fluoropolymer materials. However, given that APM's product portfolio is fluoropolymers, a restriction being implemented would produce a scenario where all R&D activities within Europe conducted by APM would cease and investments would be moved to other areas of their global footprint. Therefore, reducing the annual level of investment made by APM into Europe for R&D to zero. These changes are compared to the continued use scenario over the assessment period in Table 8-11. Table 811: Estimated discounted annual R&D spending lost under a nonuse scenario Year Total fluoropolymer R&D () Operational R&D () Alternatives R&D () 2026 - 33,400,000 - 22,600,000 - 10,800,000 2027 - 32,100,000 - 21,800,000 - 10,400,000 2028 - 30,900,000 - 20,900,000 - 9,970,000 2029 - 29,700,000 - 20,100,000 - 9,580,000 2030 - 28,600,000 - 19,300,000 - 9,220,000 2031 - 27,500,000 - 18,600,000 - 8,860,000 2032 - 26,400,000 - 17,900,000 - 8,520,000 2033 - 25,400,000 - 17,200,000 - 8,190,000 2034 - 24,400,000 - 16,500,000 - 7,880,000 2035 - 23,500,000 - 15,900,000 - 7,570,000 Assessment period total - 281,900,000 - 190,800,000 - 90,990,000 Source: RPA study team analysis Europe would therefore lose out on over 281 million in investment and capital expenditure from APM as a direct result of a restriction being placed on fluoropolymers such as TeflonTM PFA within the EU. While this figure is a substantial amount of investment to lose over the course of the investment SEA on TeflonTM PFA for Chemours APM RPA| 95 period there is a wider issue generated with regard to research and development. This being, the possible timeframes faced by the impacted industries using TeflonTM PFA, to develop and implement new materials and practices. Under a total restriction scenario and if no derogation is granted for fluoropolymers to be used within the semiconductor industry, the EU27 will see the total withdrawal of the industry from the bloc. This will result in further substantial losses of R&D investment related to both fluoropolymers and semiconductor technology withdrawing from Europe, leaving the bloc without access to semiconductors. At the same time while these investments will be lost, the time scale that will be required to reinvent semiconductor technology that isn't reliant on fluoropolymers could take between 40 and 50 years, assuming alternatives were viable. Therefore, in terms of research and development of fluoropolymers within the semiconductor industry, it is not viable for fluoropolymers to be banned and then invest in alternatives given the length of the lead time required to develop and implement new semiconductor production technology. 8.7.1.1 Moulders and converters During consultation bilateral interviews and discussions were held with key moulders and converters in the semiconductor supply chain. The identity of these enterprises cannot be disclosed for reasons of confidentiality. However, these organisations did disclose that, under a non-use scenario, it is most likely that moulders and converters would relocate their businesses outside Europe to continue supplying the rest of the world and simply cease their Europe oriented operations. This is because Europe is currently seen as the 4th priority geography in the semiconductor industry with China and Taiwan, North America and South Korea being viewed as more favourable investment areas for businesses at present. This would result in the loss of current investments made and being made in the semiconductor space within Europe, while at the same time also prohibiting new investment all together. Bilateral discussions with enterprises in the supply chain highlighted that due to the long lead times of investments in the semiconductor industry investment decisions from industry are quickly approaching finalisation stage. Thus a European climate that would attach strings to investment subsidies or create complex working conditions with a lack of access to necessary materials, the semiconductor industry may sacrifice Europe and focus on other markets. Therefore, not only will current and future investments be lost but the semiconductor industry will also pivot to other markets and not make investments to develop new materials and semiconductor manufacturing technologies in EU. A restriction would therefore lead to a loss of current and possible future investment in semiconductor technology, materials and manufacturing capacity in the EU. 8.7.1.2 Wet process equipment manufacturers Like moulders and converters, under a non-use scenario, it is likely that wet process equipment manufacturers would relocate their businesses outside Europe or shut down. In the event of business closure, these companies would lose billions of Euros invested in the advancement of their equipment. Alternatively, setting up a new production factory outside Europe would be extremely costly and time consuming. The closure of some of these businesses that dominate the market for this equipment, will in turn have an impact on all players in the supply chain globally. If most machines and equipment are being exported outside Europe the effects of a business closure or relocation will be felt globally, potentially effecting the entire global semiconductor chip market. 8.7.1.3 Fabrication plant owners RPA had limited feedback from fabrication plant owners, however, based on this information it can be concluded that if TeflonTM PFA or fluoropolymers in general becomes restricted in Europe it would not be possible to manufacture semiconductor chips. This would, therefore, result in business closure or SEA on TeflonTM PFA for Chemours APM RPA| 96 relocation outside Europe. If alternative materials were used this could then require businesses to invest large resources to develop and advance a new manufacturing process to produce the quality of chips that is needed for today's technology. It is difficult to estimate how large the monetary impact a non-use scenario could have on the semiconductor industry. It can be estimated that this figure would be in the billions, based on figures from SEMI166 initial capital investment of a fabrication plant would be upwards of 15 billion. Due to the complex and global supply chain, the shutdown of a fabrication plant could impact up to 16,000 suppliers globally. 8.8 Wider implications: European strategic goals, consumers, and endusers The use of TeflonTM PFA allows for the production and manufacture of semiconductor chips to be used in several diverse sectors. Semiconductor chips allows for the digitalisation and autonomy of motor vehicles as well as numerous other sectors. A transition from internal combustion engine vehicles to battery electric vehicles is a critical part to achieve the goals set out in the EU green deal. The transportation sector accounts for 25% of the EU's greenhouse gas emissions. Without semiconductor chips, transportation methods will have no choice but to revert to alternative methods that aren't reliant on technology. This also applies to other modes of transportation such as trains and airplanes. Unfortunately, these methods will likely use more fossil fuels increasing the greenhouse gas emissions from this sector. It is likely that without semiconductor chips the EU will not be able to fulfil its goal as the first climate neutral continent by 2050. In addition to this, the possibility of a restriction covering fluoropolymers used in the semiconductor industry will result in the European Chips Act being impossible to achieve. A restriction and heavy- handed forceful drive to develop new materials and manufacturing processes, just for the European market, according to industry sources, will create an intolerable level of strings being attached to government subsidy promised in the European Chips Act. As a result of this the semiconductor industry will sacrifice Europe as a global market and develop new manufacturing capacity in other geographical regions such as North America and South Korea. Therefore, the aims of the European Chips Act to encourage next generation chip manufacturing technologies and capacity to be brought to the European continent cannot be achieved in the event of a restriction. In addition, the continued uncertainty caused by the ongoing PFAS restriction process including fluoropolymers used in semiconductor production means Europe may miss the window of opportunity to secure investment in next generation semiconductor technology and fabrication plants. Therefore, even if a restriction is eventually deemed unnecessary for the semiconductor industry following the PFAS restriction consultation process, Europe will experience delays to secure investment in new production capacity being built in Europe. The semiconductor industry along the supply chain and throughout this consultation has been very clear that only a full and timely exemption of fluoropolymers from the PFAS restriction will allow investment which will achieve the goals of the European Chips Act. Additionally, it is likely there will be a significant setback in technology advancements in Europe. Anything digital will require a semiconductor, and without TeflonTM PFA or fluoropolymers in general there will be no semiconductor production in Europe leaving Europe to rely on semiconductor imports. As previously stated, electronic components contribute about 50% of European GDP. This also means Europe would not be able to increase its global semiconductor market share from 10% to 20% by 2030 and as the world shifts to a digital era, Europe could get left behind having to rely on semiconductor imports and advance technology systems without the use of fluoropolymers. 166 https://www.semi.org/sites/semi.org/files/2020-12/SEMI%20Chemical%20Watch%20Presentation.pdf SEA on TeflonTM PFA for Chemours APM RPA| 97 8.9 Summary The non-use scenario that has been established by the RPA study team for the purpose of this assessment is one of a total ban on the import, manufacture, and use of all fluoropolymer substances within the EU, including articles containing fluoropolymers. The focus is specifically on the impacts of a restriction placed on the substance TeflonTM PFA supplied by the Chemours APM division. This is the most restrictive scenario and provides a worst-case scenario. Due to the way the TeflonTM PFA is used, a limit in formulation concentrations would also result in a defacto ban. The continued use and non-use scenarios have been compared based on a restriction timeline starting in 2025 with the effects not being felt until the start of 2026 and the assessment timeframe extending to the end of 2035. The assessment period has been chosen to reflect a potential date by when alternatives could be commercially available, however it is recognised that for semiconductors this period may be much longer and potentially as long as 50 years. Under such a non-use scenario Chemours APM will cease all their TeflonTM PFA related activities in Europe which will result in a loss of between 117 million and 353 million in profits that would have been generated under the continued use scenario. They will also suffer a further 176 to 353 million in lost sales of TeflonTM PFA for other uses. Likewise, there will be significant disruption in the three downstream markets within the scope of this SEA. Within the semiconductor industry, due to a lack of alternatives, the development of the industry will be severed under the non-use scenario as will the viability of the automotive industry, that depends on the use of semiconductors. The combined three semiconductor market segments assessed in this study, moulders and converters, wet process equipment manufacturers and fabrication plant owners, would suffer a combined loss of 63.4 billion, which is likely to be an underestimation. The motor vehicle industry when considering just a restriction on TeflonTM PFA will suffer no financial losses. However, under a wider fluoropolymer restriction the sector will suffer losses of over 206 billion. However, since all electronic devices use a form of semiconductor chip, integrated circuit, or transistor, it can be assumed that all electronic and technology sectors will be impacted to some degree. Fluoropolymers are used in a wide range of electronic components that enable around 50% of Europe's GDP167. Therefore, it can be assumed that 50% of Europe's GDP or 7.25 trillion (based on the EU 27 GDP for 2021168) will be lost if fluoropolymers are restricted. In addition to substantial financial losses the European economy will also suffer significant levels of unemployment. Chemours APM ceasing their fluoropolymer operations will result in 629 Full Time Equivalent (FTE) individuals losing their job with a social cost to Europe of 111 million. The semiconductor supply chain will suffer unemployment in the region of just under 20,000 (FTE) workers with a social cost of just over 3 billion. The car manufacturers' market, which is highly dependent on semiconductors, will suffer over 1.14 million job losses costing over 233 billion in social costs but these job losses will only be realised under a wider fluoropolymer restriction and not when just considering TeflonTM PFA. Therefore, total social costs of unemployment under the non-use scenario restricting TeflonTM PFA are estimated to be around 3.1 billion rising to at least 236 billion when consider fluoropolymers in general. These jobs losses will occur across almost all Member States of the EU meaning the social impacts of this unemployment will therefore result in longer lasting social and financial scarring. 167 https://www.semi.org/sites/semi.org/files/2020-12/SEMI%20Chemical%20Watch%20Presentation.pdf 168https://european-union.europa.eu/principles-countries-history/key-facts-and- figures/economy_en#:~:text=The%20European%20Union%20operates%20as,2021%20was%20%E2%82%A C%2014.5%20trillion. SEA on TeflonTM PFA for Chemours APM RPA| 98 TeflonTM PFA has no known health and environmental hazards, therefore there are no associated health and environmental benefits under a non-use scenario. Persistence is the property of concern, which is measured in terms of emissions. In the event of a non-use scenario, no emissions of TeflonTM PFA would occur. Under the non-use scenario all current and future R&D plans of Chemours APM will be cancelled, which equates to over 281 million, set to be spent on alternative fluoropolymer development and process refinements, no longer being invested in Europe. In addition to the total loss of R&D spending from Chemours APM, a restriction would result in the semiconductor industry sacrificing the European market and moving investment plans and operations to outside Europe. Under a non-use scenario some of Europe's most ambitious and strategic political and economic objectives will be near impossible to achieve. Policies such as the sustainable and smart mobility strategy, and Fit-for-55 will become much more difficult, if not impossible, to achieve due to a lack of access to electric vehicles and key industrial semiconductor components. The European Chips Act will be impossible to achieve without access to semiconductors which are manufactured with the use of TeflonTM PFA. In addition the continued uncertainty of regulation could result in Europe missing the window to secure next generation fabrication plant technology which it could use in the event of a restriction not being placed on fluoropolymers. SEA on TeflonTM PFA for Chemours APM RPA| 99 9 Conclusions This socio-economic analysis has looked to assess and value the benefits and costs to the European economy and society under a continued and non-use scenario regarding the importation and use of TeflonTM PFA supplied by Advanced Performance Materials (APM) division of The Chemours Company. The entities under analysis within this work are the European operations of Chemours APM, the semiconductor manufacturing supply chain and the European automotive sector. For the actors in each of these respective supply chains and for APM's operations the RPA study team sought, where possible, to evaluate: the volume of product being manufactured/imported and sold, the revenue the market segment generates, profits earned on these revenues, the number of enterprises within the sector; the number of employees within the sector, the value of continued employment, the social cost of unemployment, levels of research and development, potential health risks and savings, levels of emissions, and possible environmental costs while also considering impacts to existing and future EU polices and European consumers. The continued use and non-use scenarios of this assessment look at the period of 2026-2035 to maintain comparability between both scenarios while also accounting for the likely period it would take for new alternatives and products to enter the market after a potential restriction may have come into force. Over this period under the continued use scenario, Chemours APM is estimated to generate profits of between 294 and 353 million with 117 to 353 million coming from semiconductor related sales of TeflonTM PFA and 176 to 353 million from other sales of TeflonTM PFA. The semiconductor supply chain reliant on access to TeflonTM PFA is estimated to generate profits of over 63.4 billion. The handling and sale of PFA reliant products for semiconductor manufacturing is therefore estimated to generate economic benefits of between 63.5 and 63.8 billion. This essential supply chain subsequently permits the automotive sector to operate and generate profits of over 206 billion. Under the nonuse scenario the semiconductor industry and supply of TeflonTM PFA will be wiped out in Europe causing economic losses of between 63.5 and 63.8 billion. In addition to this, between Chemours APM and the semiconductor supply chain over 21,000 individuals will be made unemployment across the continent incurring additional social costs of over 3.2 billion. A restriction scenario confined to just TeflonTM PFA would not result in the automotive industry facing economic losses, due to a presumed shift to using imported chips. However, while imported chips allow manufacturing to continue, such a vast increase in the amount of imports into Europe would have negative implications for the European economy in terms of balance of trade and supply side security. However, if a wider fluoropolymer ban is considered the automotive sector would also cease to operate due to no access to semiconductor chips causing 206 billion in economic damage and causing over 1.14 million cases of unemployment incurring a social cost of over 236 billion. The widespread sale and use of TeflonTM PFA and TeflonTM PFA products also means all Member States of the European Union are impacted by these supply chains. All Member States can share in the financial and social benefits under the continued use scenario and similarly all Member States will suffer losses both financially and socially under the non-use scenario. The positive continued use impacts and negative non-use impacts of TeflonTM PFA supplied by Chemours APM go beyond financial and employment. The effects are linked to several vital European security, social and environmental policies. TeflonTM PFA supplied by APM is a crucial component of vital societal functions, both for governments and citizens alike, and results under the continued use scenario the lofty ambitions of legislatures being achievable but unachievable under the non-use scenario. SEA on TeflonTM PFA for Chemours APM RPA| 100 The methods applied in this report are not without limitation and a certain level of assumptions and uncertainties. One area of ambiguity is the time at which many of these assessments were made was at a time before the global and European economy begun to suffer with rising inflation and international crises. A global or European economic slowdown may result in the benefits and the costs presented in this assessment to be overestimated, however, these variances do not diminish the underlying findings of this assessment with regards to how vital TeflonTM PFA is to the supply chains within the scope of this assessment. In short, the figures and findings of the above assessment indicate that Europe is substantially better off, financially, and socially, under a continued use scenario than under a non-use scenario provided by a restriction. The full list of findings covered by this assessment can be found in the tables below. The tables present the scale of the benefits and/or costs of each area of discovery for both the continued use and non- use scenario with the differences and impacts discussed alongside them. SEA on TeflonTM PFA for Chemours APM RPA| 101 Table 91: Continued use vs Nonuse scenario Cost/Benefit summary - Chemours APM Impact areas Continueduse scenario Nonuse scenario Substances in scope TeflonTM PFA None Volumes Revenues Profits Emissions 7,732 - 9,278 tonnes (total) 0 3,093 - 4,639 tonnes (semiconductor) 4,639 tonnes (other) 422 million - 1.1 billion (total) 0 169 million - 508 million (semiconductor) 254 million - 508 million (other) 294 million - 706 million (total) 0 117 million - 353 million (semiconductor) 176 million - 353 million (other) 0 0 Health Impacts 0 0 Environmental Impacts 0 0 Employment Innovation EU policies 629 persons employed >284 million employment value 281 million (total) 91 million (alternatives) 190 million (operational) European Green Deal Sustainable and smart mobility strategy Fit-for-55 629 persons unemployed 111 million social costs 0 European Green Deal Difference Chemours APM would cease their European activities under a non-use scenario resulting in no products being supplied. Cessation of business activities will result in a total prevention of all tonnes of TeflonTM PFA from being imported into Europe. Cessation of business activities under non-use will result in total loss of all revenues. Cessation of business activities under non-use will result in total loss of all profits. No European based manufacturing results in 0 emissions under continued use and 0 emission reductions under non-use. TeflonTM PFA has no known hazards to harmful to human health, resulting in no human health costs under continued use and no health savings under non-use. TeflonTM PFA does not degrade during normal conditions of use, nor over time and is not PBT. It is persistent and environmental impacts are determined based on emissions, see above. Cessation of business activities results in total loss of employment preventing employment benefits being experienced and instead incurs social costs of between 111 and 145 million. Total assessment period R&D spending of 281 million will no longer proceed due to no business portfolio being present to fund research projects. Under a non-use scenario only the Green Deal will continue to be achievable albeit very severely hampered, all other strategic objectives will be unachievable under a non-use scenario. SEA on TeflonTM PFA for Chemours APM RPA| 102 Table 91: Continued use vs Nonuse scenario Cost/Benefit summary - Chemours APM Impact areas Continueduse scenario Nonuse scenario EU industrial strategy European Chips Act Table 92: Continued use vs Nonuse scenario Cost/Benefit summary - Semiconductor sector Impact areas Continueduse scenario Nonuse scenario Substances/products in TeflonTM PFA moulded components None scope Semiconductor manufacturing equipment Semiconductors Volumes 2,910 - 3,557 tonnes of moulded components 0 >1 million pieces of semiconductor manufacturing equipment >678 billion semiconductors Revenues 474 billion - 476 billion 0 Profits 63.4 billion 0 Emissions 0 0 Health Impacts 0 0 Environmental Impacts 0 0 Difference Difference All downstream users would cease their European activities under a non- use scenario resulting in no products being supplied. Cessation of business activities will result in a total prevention of all products from being manufactured and supplied in Europe. Cessation of business activities under non-use will result in total loss of all revenues. Cessation of business activities under non-use will result in total loss of all profits. TeflonTM PFA is not emitted during the manufacturing stage of these products and no emissions will occur under a non-use scenario and emissions from legacy products has not been assessed. TeflonTM PFA is not hazardous at normal operating temperatures below 260 C. No products pose human health risks resulting in no health costs under continued use and no health savings under non-use. TeflonTM PFA has no environmental hazards. It is persistent and environmental impacts are determined based on emissions. In these end products negligible emissions are assumed and once in landfill it is inert, and no leaching is expected. Therefore, there are no environmental costs under continued use and no environmental savings under non-use. SEA on TeflonTM PFA for Chemours APM RPA| 103 Table 92: Continued use vs Nonuse scenario Cost/Benefit summary - Semiconductor sector Impact areas Continueduse scenario Nonuse scenario Employment >21,000 persons employed >21,000 persons >7.84 billion employment value unemployed 3.16 billion social costs Innovation EU policies 0 alternatives spending 80 billion+ in planned semiconductor factory investment spending European Green Deal 0 European Green Deal Sustainable and smart mobility strategy Fit-for-55 EU industrial strategy European Chips Act Difference All employees will be made redundant in the semiconductor and automotive industry under the non-use preventing employment benefits being experienced and incurring a social cost of between 236 and 302 billion. No PFAS alternative R&D spending will be lost but over 80 billion in planned investment into new semiconductor fabrication plants will no longer proceed in Europe. Under a non-use scenario only the Green Deal will continue to be achievable albeit very severely hampered, all other strategic objectives will be unachievable under a non-use scenario. Table 93: Continued use vs Nonuse scenario Cost/Benefit summary - Automotive sector Impact areas Continueduse scenario Nonuse scenario Substances/products in Internal combustion engine vehicles None scope Electric vehicles Volumes Revenues Profits >117 million motor vehicles >3.2 trillion >206 billion >117 million motor vehicles (only PFA restricted) 0 (all fluoropolymers restricted) >3.2 trillion (only PFA restricted) 0 (all fluoropolymers restricted) >206 billion (only PFA restricted) Difference All downstream users would cease their European activities under a non- use scenario resulting in no products being supplied when all fluoropolymers are considered but not when only TeflonTM PFA. Cessation of business activities will result in a total prevention of all products from being manufactured and supplied in Europe when all fluoropolymers are considered but not when only TeflonTM PFA. Cessation of business activities under non-use will result in total loss of all revenues when all fluoropolymers are considered but not when only TeflonTM PFA. Cessation of business activities under non-use will result in total loss of all profits when all fluoropolymers are considered but not when only TeflonTM PFA. SEA on TeflonTM PFA for Chemours APM RPA| 104 Table 93: Continued use vs Nonuse scenario Cost/Benefit summary - Automotive sector Impact areas Continueduse scenario Nonuse scenario 0 (all fluoropolymers restricted) Emissions 0 0 Health Impacts 0 0 Environmental Impacts 0 0 Employment Innovation EU policies >1.14 million persons employed >585 billion employment value 0 European Green Deal Sustainable and smart mobility strategy Fit-for-55 0 persons unemployed (only PFA restricted) 0 social cost (only PFA restricted) >1.14 million persons unemployed (all fluoropolymers restricted) 236 billion social costs (all fluoropolymers restricted) 0 European Green Deal Difference TeflonTM PFA is not emitted during the manufacturing stage of these products and no emissions will occur under a non-use scenario and emissions from legacy products has not been assessed. TeflonTM PFA is not hazardous at normal operating temperatures below 260 C. No products pose human health risks resulting in no health costs under continued use and no health savings under non-use. TeflonTM PFA has no environmental hazards. It is persistent and environmental impacts are determined based on emissions. In these end products negligible emissions are assumed and once in landfill it is inert, and no leaching is expected. Therefore, there are no environmental costs under continued use and no environmental savings under non-use. All employees will be made redundant in the semiconductor and automotive industry under the non-use preventing employment benefits being experienced and incurring a social cost of 236 billion. when all fluoropolymers are considered but not when only TeflonTM PFA. No PFAS alternative R&D spending takes place and so none will be lost from this sector. Under a non-use scenario only the Green Deal will continue to be achievable albeit very severely hampered, all other strategic objectives will be unachievable under a non-use scenario. SEA on TeflonTM PFA for Chemours APM RPA| 105 Table 93: Continued use vs Nonuse scenario Cost/Benefit summary - Automotive sector Impact areas Continueduse scenario Nonuse scenario EU industrial strategy Difference SEA on TeflonTM PFA for Chemours APM RPA| 106 Annex 1 Uncertainties and assumptions This section presents an overview of the limitations and uncertainties of this study and considers their potential impact on the conclusions. Table A1-9-4 provides a summarised overview of each element and assesses their significance for the results of this study. Table A194: Uncertainties and limitations Uncertainty and Limitation Explanation Number of workers /companies Discount rate Positive bias in reported data Growth rates Profit margins of downstream users The number of enterprises with exposure and the number of exposed workers is challenging to calculate accurately. The number of workers is the primary determinant of the benefits and the number of companies the primary determinant of the costs. Both are related. The costs and benefits modelled under the use and non-use scenario may therefore be under- or overestimated. The estimates in this report have all been modelled using a static discount rate of 4%. A declining discount rate allocates more weight to costs and benefits that occur after 20 years. Although the costs and benefits increase (due to the lower discounting effect), the cost-benefit ratio does not change. This further shows that the costs and benefits are generally equally distributed over time. It is possible that there is some self-selection among companies that participated in the consultation for this study or provided data for the surveys of the industry associations. Worst-performing companies are less likely to be aware of PFAS in their products and be willing to contribute to the study. This may underestimate both costs and benefits and has not been further assessed. The growth rates for Chemours APM operations and that of their downstream users were made and supplied to the RPA study team at a time before inflation begun to greatly accelerate. Since international crises have caused inflation to increase, spending to decline and economies to slow there is a high potential for the stated growth rates in this SEA to be above what will truly be experienced in the short term. This will likely only apply to the short term however with longer term projections likely to be unaffected. Slower true growth rates due to international economic issues may mean some of the short-term estimates within this SEA are unintentionally overestimated. The scale of this overestimation is hard to determine as this highly dependent on the scale and severity with which issues such as inflation and economic slowdown in Europe reach. The profit margins that have been applied to downstream users such as Li-ion battery Under () or over (+) estimate Cost Benefits ++/-- ++/-- -/+ -/+ - - +? +? +/- +/- SEA on TeflonTM PFA for Chemours APM RPA| 107 Table A194: Uncertainties and limitations Uncertainty and Limitation Explanation manufacturers are amalgamated industry average operating margins extracted from Eurostat. Given that these estimations account for many businesses, substances, and products out of scope of this SEA there is potential for estimates to be under or overestimated. In specific instances the above report has highlighted where it is believed underestimations or overestimations have been made. All tax calculations have been estimated on a "most expensive" scenario whereby the highest possible tax bill for an individual has been estimated by assuming all individuals are unmarried and have no dependents. The tax income per person is therefore likely to be an overestimation of the true tax bills Tax contributions of most of these individuals would face and employees subsequently national tax receipts would be lower. However, the model the RPA study team have designed does not use multipliers and as such putting extra income under tax receipts or disposable income results in the same final employment benefit figure. Therefore, while tax receipts are overestimated the final benefit is not. Once again however it should be noted this value is Chemours and likely to be considerably higher as these figures will sector employment be subject to government spending, money, and contributions consumption multipliers but these multipliers cannot currently be accurately estimated. All benefits of employment will have been underestimated due to no government spending or Government consumption multipliers being applied. These would spending multiplier naturally occur within an economic system and thus and a consumption will grow the scale of the returns provided by multiplier employment but with them not being applied in the model of this SEA the presented benefits will be underestimated by large amounts. Source: RPA Study Team analysis Under () or over (+) estimate Cost Benefits NA + NA -- NA --- SEA on TeflonTM PFA for Chemours APM RPA| 108 Annex 2 Consultation Response Statistics The number of consultation responses and interviews for the APM division are summarised within this Annex, a summary of responses can be seen in the Table A2-1. Questionnaires were constructed to target specific information for each player in the supply chain. A total of three surveys were created to target: fabrication plant owners, equipment manufacturers and moulders and converters. Fifteen downstream user questionnaires were sent with responses from nine companies (including one industry association) covering all the supply chain actors investigated. RPA invited all companies to semi-structured interviews, unless they declined to participate in the survey, and conducted interviews with six companies, including a university conducting research and development in the field. The survey was sent in April 2022 and it was preceded by a workshop introducing the scope and purpose of the survey. Interviews were conducted in Q3 2022 and Q1 2023. The table A2-1 presents a summary of all surveys and interviews. Table A21: Consultation responses summary Total surveys/interview invitations sent Fabrication plant Chemical distribution & Processing(a) Moulder & Converter R&D Institute Industry Association(b) Equipment supplier Total surveys/interviews conducted Source: RPA study team analysis Notes: (a) considered as an equipment manufacturer (b) considered as a fabrication plant owner Surveys 14 1 2 9 0 1 1 9 Interviews 13 1 2 7 1 1 0 8 The topic has been important within the affected industries and corresponding industry associations and there have been several concurrent surveys running, which the study team believes hampered efforts in obtaining further data. SEA on TeflonTM PFA for Chemours APM RPA| 109 A A 4 I 1 R PA Risk&PolicyAnalysts Risk & Policy Analysts Limited Suite C, 2nd floor, The Atrium, St Georges Street Norwich, Norfolk, NR3 1AB, United Kingdom Tel: E-mail: IM@rpaltd.co.uk Website: www.rpaltd.co.uk If printed by RPA, this report is printed on 100% recycled paper