Forward-looking: The global semiconductor industry could face one of its biggest threats ever in the next decade: a shortage of copper. A new report warns that a third of production faces supply disruptions as the raw material becomes increasingly vulnerable to drought caused by climate change.
PricewaterhouseCoopers (PwC) writes that the global semiconductor industry is expected to reach $1 trillion by 2030. However, it adds that one-third (32%) of worldwide production will be reliant on an at-risk copper supply by 2035, a figure that will rise to 58% by 2050 if emissions do not decline.
Today, the only copper-producing country that faces severe drought risks is Chile. The South American nation is the world's largest copper producer, but its mines, which require a constant water supply, are struggling with severe droughts that are slowing down production.
PwC writes that within a decade, copper mines in the majority of the 17 countries that supply the semiconductor industry will also face severe drought risks.
Copper is the workhorse "wiring" metal inside modern integrated circuits. Its low electrical resistivity and good electromigration resistance let it carry signals and power through billions of microscopic interconnects with less delay and heat than the aluminum networks it replaced in the late-1990s.
The last chip crisis that began in 2020 was caused by a spike in demand for electronics during the pandemic and major supply chain disruptions. Automakers, who had cut chip orders early on, were hit hard when demand rebounded. Factory shutdowns in Asia worsened shortages, affecting everything from cars to smartphones. The crisis exposed the global reliance on a fragile, concentrated chip supply chain. PwC notes that it cost the US economy a full percentage point in GDP growth and Germany 2.4%.
The report notes that the risk to the copper supply will increase without a greater focus on material innovation, such as using alternative materials, and diversifying suppliers. It also recommends that copper miners increase water supply by investing in desalination plants, improving water efficiency and recycling water.
While Chile and Peru are increasing their mining efficiency and building desalination plants, it is not a solution for countries with no access to large bodies of seawater.
PwC reports that 25% of Chile's copper production is currently at risk of disruption, a figure expected to rise to 75% within the next decade and reach between 90% and 100% by 2050.
"Around half of every country's copper supply is at risk by 2050 – no matter how fast the world reduces carbon emissions," the report says.
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