Semiconductor fabrication is the step-by-step industrial process that turns raw materials into integrated circuits (computer chips) by building many tiny layers and patterns on a wafer in ultra-clean environments. Think of it like baking a very precise, multi-layered cake where each stage must be exact or the final product fails; for investors, fabrication matters because it is capital-intensive, has long lead times and supply risks, and therefore strongly affects costs, availability and profitability across technology-linked companies.
data centerstechnical
Large facilities that house rows of computer servers, storage devices, and networking equipment that store, process and move digital information for websites, cloud services and companies. Like a warehouse filled with powerful computers instead of boxes, they keep online services running around the clock. Investors care because demand, location, energy use and reliability drive revenue, costs, growth prospects and regulatory or operational risks for businesses that own or lease them.
wastewatertechnical
Wastewater is the used water and liquid waste that flows from homes, businesses and factories—everything from sinks and toilets to industrial runoff and process liquids. It matters to investors because collecting, treating and disposing of this water drives costs, regulatory exposure and business opportunities: like a city’s plumbing, failures require costly fixes while upgrades or treatment technologies can create revenue for utilities, construction, and environmental-tech companies.
digital infrastructuretechnical
Digital infrastructure consists of the underlying technology systems that enable the storage, transmission, and processing of digital information, such as internet networks, data centers, and cloud services. It functions like the roads and utilities that keep a city running, allowing digital activities to happen smoothly and reliably. For investors, strong digital infrastructure is essential because it supports the growth of digital services and can influence the stability and efficiency of the broader economy.
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Analysis finds AI could add 30 trillion liters of annual water demand, but targeted reuse and digital infrastructure investments can substantially offset demand and protect communities
WASHINGTON--(BUSINESS WIRE)--
The rapid global expansion of artificial intelligence is set to drive a 129% increase in water demand across the AI value chain by 2050, according to new research by Xylem (NYSE: XYL) and Global Water Intelligence (GWI). Watering the New Economy: Managing the Impacts of the AI Revolution provides the most comprehensive assessment to date of how AI is reshaping global water use. It also highlights practical ways to meet that demand while strengthening water security for communities.
Spending on AI is forecast to approach $2 trillion in 2026,1 accelerating infrastructure build-out worldwide. By the middle of the century, this expansion is projected to add 30 trillion liters of water demand, annually, fueled by a surge in power generation (~54% of the increase), semiconductor fabrication (~42%), and data center expansion (~4%).
Crucially, the report finds that this additional demand does not have to result in competition between industry and communities. Today, global water systems process roughly 320 trillion liters of wastewater each year and lose an estimated 100 trillion liters through aging infrastructure – volumes that, if recovered through targeted investment, could substantially offset AI’s projected growth in water use and reduce strain on freshwater resources.
The report calls for a coordinated “water transition” centered on water reuse, digital infrastructure, and cross-sector partnerships – to ensure water is a resilient foundation for economic growth, rather than a constraint on innovation.
“AI is placing new demands on water supplies, but many of the tools needed to address the challenge already exist,” said Matthew Pine, Xylem’s president and CEO. “Advanced treatment technologies, for example, allow us to recycle water rather than waste it. Digital systems can help better manage supply in real time, reducing water lost to leaks. It's time for a water transition built on targeted investment and collaboration between industry, utilities, and governments to ensure water systems can support both growth and community resilience.”
The analysis also highlights rising geographic risk. Nearly 40% of existing data centers are already located in regions experiencing high water stress,2 and future growth is expected to concentrate in similarly constrained watersheds. This underscores the need for localized, basin-level solutions, even as global efficiency gains create headroom for growth.
“Our projections examine water use across the full AI value chain – from chip fabrication and data center operations to indirect demand from power generation – and assess how technology choices shape future demand,” said Christopher Gasson, CEO, Global Water Intelligence. “The greatest pressure points emerge in semiconductor manufacturing and in fast-growing data center hubs in the United States, East Asia, and South Asia. In these regions, expanded wastewater reuse, leakage reduction, and targeted infrastructure investment can fully offset future growth.”
The report points to early examples of how collaboration can deliver shared benefits. In Mexico, for example, utilities in Mexico City and Monterrey worked together with Amazon and Xylem on smart pipeline upgrades to reduce leaks. A system of sensors and advanced analytics will save more than 1.3 billion liters of water a year and help improve the reliability of water supplies for residents.
About Xylem
Xylem (XYL) is a Fortune 500 leading global water solutions company that empowers customers and communities to build a more water-secure world. Our 23,000 diverse employees delivered revenue of $8.6 billion in 2024, optimizing water and resource management with innovation and expertise. Join us at www.xylem.com and let’s solve water.
