The Dirty Secret Behind the Chip Boom
Chips power the modern economy, but they also produce toxic waste
Without semiconductors, we would have to entertain ourselves without TVs, communicate without smartphones, research without computers, defend ourselves without high-tech weapons, and boost company earnings without AI. We’re a nation built on technology and sustained by semiconductor chips.
Semiconductors, which are colloquially referred to as chips, are so important that Congress named an infrastructure bill after them (the CHIPS and Science Act). Between that, two other federal laws, and at least a dozen state initiatives, we’ve allocated over $90 billion to subsidizing the American chip industry. That’s about nine years’ worth of federal farm subsidies. Thanks to these initiatives, the U.S. is expected to triple its domestic semiconductor manufacturing capacity by 2032.
However, our need for semiconductors has made us willfully ignorant of their externalities.
Semiconductor factories, known as fabs, are prolific producers of toxic waste — but nobody wants to talk about it.
On the bright side, this collective ignorance has created a compelling investment opportunity.
The Dirty Details
Semiconductor factories churn out toxic slurries, acid gases, and polyfluoroalkyl substances (PFAS). This hazardous waste spills out into our drinking water.
Samsung’s semiconductor facility in Austin, Texas, spilled hundreds of thousands of gallons of toxic waste, including sulfuric and hydrochloric acid, into the Colorado River in 2022.
But it’s the PFAS, compounds that are essential to producing advanced chips, that are the hardest to get rid of.
PFAS are also called “forever chemicals” because they can take decades to decay in the body. They’re associated with a range of health issues, including hypertension, diabetes, infertility, cancer, obesity, autism, cardiovascular diseases, and kidney and liver disorders.
Their impact on fertility is particularly intense. Mount Sinai researchers found that exposure to PFAS can reduce fertility in women by as much as 40%, and a 2019 meta-analysis of six studies found that female fab workers had a 29% to 43% higher risk of spontaneous abortion than nonfab workers.
But it’s not just factory workers who are exposed. Millions of Americans are exposed to forever chemicals every day.
Conventional wastewater treatment doesn’t remove PFAS, so contaminated water passes through most plants into rivers, lakes, and groundwater that feed drinking‑water systems. Most at-home filtration solutions don’t remove them.
There are still no PFAS‑specific federal discharge limits for factories, and only a minority of states have them. That means that most fabs can still send PFAS‑contaminated wastewater to sewers or rivers.
Across the U.S., public water systems and states have secured $14 billion in PFAS settlements from manufacturers such as 3M and DuPont for contaminating local water sources.
In 2024, the EPA issued the first federal regulations on six types of PFAS in drinking water, scheduled to go into effect by 2029.. However, Trump’s new head of the EPA, Lee Zeldin, dismantled regulations for all but two types of PFAS, and pushed the deadline for compliance back to 2031.
This is curious, as Trump’s first administration was supportive of PFAS regulations. This was before the AI boom though, and before Trump realized that the growth story holding up the stock market was dependent on forever chemicals. God forbid human and environmental health get in the way of shareholder value.
States are moving faster. In 2025, more than 250 PFAS bills were introduced, and dozens of states have now passed regulatory guidelines on forever chemicals in drinking water.
The Investment Opportunity
In this economy, any company with a decent story is one Reddit post or CNBC hit away from becoming an overvalued meme stock. In other words, narrative increasingly drives markets, and the fact that “semiconductor factories are incredibly pollutive” is a doomer story is … well, an opportunity.
If the major AI companies were pop stars, the second-order beneficiaries, like HVAC, utilities, and data center construction companies, would be the backup dancers. Now, four years into the AI boom, all this talent is expensive and tired. The opportunity now lies in the stagehands that clean up every night after the performance is over.
Veolia Environment is one of those stagehands. It’s a $28 billion utility company that provides municipal water and waste services to more than 100 million people; but, more interestingly, it is a world leader in desalination and deals with hazardous waste.
If you own a nuclear power plant, Veolia will take your radioactive waste. If you own a semiconductor factory or municipal water facility and need to eliminate PFAS from your wastewater so you don’t get sued, Veolia provides those services.
Finally, it supplies an essential input to semiconductor manufacturing: ultrapure water. If you thought data centers needed a lot of water, you’re going to hate semiconductor factories.
Margins have been improving, and it is trading below its five-year average price-to-earnings multiple. Disclosure: I bought some Veolia shares back in January, but I’m still optimistic about its prospects. Of the 16 analysts who cover Veolia, 10 rate it a buy, 3 are overweight, and 3 recommend holding.
The Silicon Wave
In 1979, The China Syndrome, a thriller about a fictional nuclear meltdown starring Jane Fonda, came out just 12 days before the actual Three Mile Island disaster. Both the real crisis and the movie, followed by another nuclear disaster thriller called Silkwood in 1983, catalyzed widespread fear and opposition to nuclear power. By 1986, Gallup found that only 23% of Americans were willing to live within five miles of a nuclear plant, down from 42% in 1976.
In 2024, The Silicon Wave came out in China. It was advertised as the country’s “first TV show about semiconductors.” According to IMDb, the CCP-funded show follows a group of “idealistic tech professionals” who return from overseas to join the Chinese chip industry. Unfortunately for President Xi, it doesn’t seem to have caught on.
An American show about the semiconductor and AI wars would probably crush. (Casting note: Jesse Eisenberg should probably play Sam Altman, but Benedict Cumberbatch might work too.) The show would be dramatic, intellectual, and ultimately patriotic. It definitely wouldn’t mention that a side effect of this noble quest is cancer-causing chemicals, because that wouldn’t make for a good story.
But that’s the point: There are often opportunities hiding in what stories leave out. That is exactly why the Veolia opportunity exists.
It’s funny how powerful stories are. You grow up thinking that they’re for kids, and being an adult is about paying attention to “real life.” But actually, making “real life” decisions, like where to work, who to vote for, where to put your money, etc. — requires a continuous parsing of stories — both what you’re being told, and what you’re conspicuously not.