Climate change could have a major impact on global semiconductor supply chains, new research warns, with production across key markets facing disruptions due to changing conditions.
Analysis from PwC shows that nearly one-third (32%) of global semiconductor production will be reliant on copper supplies at risk of water shortages over the next decade.
The report, published this week, noted that water shortages pose a serious threat to copper supplies in key markets, such as Chile.
Copper mines play a crucial role in the semiconductor supply chain, providing core materials used to manufacture chips. However, mining practices require significant volumes of water to function, and with changing climactic conditions creating droughts, this risks exacerbating existing shortages.
While the PwC specifically highlighted Chile as a market facing “severe drought risks”, around 17 other countries or regions that supply the industry will face similar challenges within the next decade.
Other key markets that supply the semiconductor industry with copper materials include China, Brazil, Mexico, and Australia.
“More and more of the copper supply that semiconductor production relies on is at risk,” the consultancy said.
“As early as 2035, at least 34% of every semiconductor-making territory’s copper supply is projected to be at risk of drought disruption.”
Glenn Burm, global semiconductors leader at PwC South Korea, said semiconductors are the “hidden lifeblood of modern technology” and warned disruption to supply chains could prove disastrous for the global tech industry.
“It’s hard to think of a company that doesn’t rely on semiconductors in some way,” Burm said.
“They underpin economic security, are vital to unlocking the potential of AI and integral to renewable energy.”
Burm called on a concerted effort from industry and global governments to mitigate the risks posed to production by limiting the “physical risks of climate change”.
“Around the world, companies are adapting by boosting water production, diversifying supply chains, and strengthening climate resilience,” he said. “There’s great progress, but businesses can and should do more.”
Preventing global ship shortages
The tech industry has faced chip shortages in the recent past, most notably during the pandemic-era surge in demand. This shortage was largely due to factor and supply chain disruptions as a result of lockdown practices and had a huge impact on industries dependent on semiconductors.
A host of leading tech companies were impacted by the disruption, with Cisco reporting significant challenges in mid-2021 as a result.
That’s why proactive steps are vital to preventing a repeat of the pandemic shortage, according to Lynne Baber, PwC’s global deputy sustainability leader.
“By uncovering hidden vulnerabilities across supply chains and operations, businesses can proactively shape resilience strategies that protect value at risk—whether financial, operational or reputational,” Baber said.
“Smarter climate adaptation unlocks agility, inspires innovation, and positions companies to lead in a more volatile world.”
In terms of industry action, PwC research shows that 68% of investors believe companies should increase efforts to “de-risk” supply chains.
For copper mining operations specifically, this includes increasing water supplies by investing in desalination planets, recycling water, and bolstering water efficiency.
Some operators in Chile are already using desalination techniques to support activities in this regard, PwC noted.
Semiconductor manufacturers are also making headway on this front by using alternative materials, the consultancy said.
Make sure to follow ITPro on Google News to keep tabs on all our latest news, analysis, and reviews.
English (US) ·