Climate change could disrupt global semiconductor production over the next decade due to the impact of extreme weather and drought on the extraction of copper, a critical material used in chip production, according to a new report by PwC.
The report, released on Tuesday, suggests that the risk of climate disruption poses a growing threat to the semiconductor industry, which is expected to exceed $1 trillion by 2030.
The report shows that copper mines, which require a constant supply of water to operate, are increasingly at risk of severe drought due to climate change.
Due to this, a third of projected semiconductor supply production could be at risk within by 2035 unless the industry adapts to climate change, according to the study.
PwC data found that 32 per cent of semiconductor production is currently at risk, rising to 58 per cent if emissions do not decrease.
Currently, copper extraction faces serious drought risks only in Chile, with the report pointing out that within a decade these risks could spread to the other 17 countries where copper mines are located, jeopardising semiconductor production.
Glenn Burm, global semiconductors leader at PwC South Korea, emphasised the importance of semiconductors in modern technology and how the industry is becoming increasingly dependent on copper, particularly to boost AI developments.
“We can act now by understanding and managing risks to supply, including the physical risks of climate change” he said.
Burm pointed out companies should continue to adapt to climate change by boosting water production, diversifying supply chains, and strengthening climate resilience.
“There’s great progress, but businesses can and should do more,” he said. “As AI and other technologies drive digital transformation, the importance of securing critical commodities will only grow.”
The report includes several actions that stakeholders can take, including copper miners increasing water supply by investing in desalination plants, improving water efficiency and recycling water.
A greater focus on material innovations is also mentioned, such as using alternative materials, diversifying suppliers, and working with them and other partners along the value chain to build climate resilience.
Lynne Baber, global deputy sustainability leader, PwC, explained: “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.”
