Climate change is increasingly making its way into the world of technology, and a recent PwC report shows just how much this impact could be felt in the coming years. According to the consultancy’s estimates, as much as 32% of global semiconductor production could be at risk by 2035 due to problems with the availability of copper – a key raw material used in chip manufacturing. This is four times the current level.
The reason? Droughts and increasing water shortages in copper mining countries. Chile – the largest producer of the metal – is already experiencing declines in mine productivity precisely because of the water crisis. Similar challenges await Peru, China, the USA, Australia and many African countries on which the global copper supply chain depends.
From the perspective of the IT sector and semiconductor-dependent industries, the problem is not just with mines. PwC reminds us that each chip contains billions of microscopic copper wires – and while research into alternatives is ongoing, there is currently no material with comparable performance and price.
Climate risk for the chip industry is thus becoming as strategic as geopolitics. The example of the recent semiconductor crisis, which cost the US a percentage point of GDP growth and Germany as much as 2.4 per cent, shows how vulnerable economies are to such shocks. This time, however, the problem does not stem from a pandemic, but from chronic and predictable environmental changes.
Some countries are taking action – Chile and Peru are investing in desalination technology and increasing extraction efficiency. But as PwC points out, this is only a solution for countries with access to the ocean. The rest of the world will have to find other ways to maintain stability of supply.
If the trend continues, up to half of global copper production could be systemically at risk by 2050 – regardless of the rate of CO₂ reduction. Faced with this scenario, the semiconductor industry needs to start considering climate as much of a risk factor as technology and policy.
