A new report by PwC has found that climate change poses a growing threat to the global semiconductor industry, with up to 32% of chip production at risk by 2035 due to disruptions in copper supply. If global emissions continue on their current trajectory, the figure could escalate to 58% by 2050.
The report, part of PwC’s Protecting People & Prosperity series, examines how severe droughts driven by climate change could impact the availability of copper—an essential material used in semiconductor manufacturing. The semiconductor sector, currently valued at US$650 billion, is expected to surpass US$1 trillion in revenue by the end of the decade. This rapid growth will only intensify its dependence on critical raw materials like copper.
Copper plays a foundational role in semiconductor production. It is used in chip interconnects, printed circuit boards, and packaging. But copper extraction relies on vast quantities of water. As drought conditions worsen, especially in copper-rich regions, mining operations could slow down or stop altogether, triggering supply disruptions that would ripple across the chip manufacturing ecosystem.
Currently, only one major copper-supplying country to the semiconductor industry—Chile—is classified as facing severe drought risk. But according to PwC’s projections, within a decade, copper mines in the majority of the 17 countries that provide copper for chip manufacturing will experience high drought exposure. This means that by 2035, at least one-third of all semiconductor production could be reliant on water-stressed copper sources.
The report highlights that this risk is not just theoretical. Using trade and geographic data, PwC traced where the world’s top five semiconductor-producing countries—such as the U.S., Taiwan, South Korea, Japan, and China—source their copper. It then overlaid this data with drought forecasts to determine how exposed these supply chains are to future climate events.
Glenn Burm, PwC’s Global Semiconductors Leader based in South Korea, emphasized the urgency of the situation. “Semiconductors are embedded in everything—from AI infrastructure to cars, smartphones, and medical devices. Any disruption to this supply chain could have wide-reaching economic consequences,” he said. “We can act now by understanding and managing the physical risks of climate change.”
While some companies are already responding, PwC says the level of adaptation must scale up quickly. Copper miners, especially in Chile, have begun investing in desalination plants to secure their water needs. Others are improving water recycling and efficiency in their operations.
On the semiconductor side, manufacturers are exploring several resilience strategies. These include material innovation to reduce reliance on copper, producing more compact and efficient circuits, diversifying supplier bases, and embracing circular economy practices such as recycling used materials.
However, PwC warns that individual action may not be enough. A coordinated, value-chain-wide response is needed. Business leaders are advised to first identify climate vulnerabilities across their supply networks and then implement adaptive measures—such as developing alternative sourcing strategies, investing in climate-resilient infrastructure, and forging partnerships with suppliers to strengthen joint resilience.
Lynne Baber, PwC’s Global Deputy Sustainability Leader, said that building resilience now can protect long-term value. “By uncovering hidden vulnerabilities across supply chains and operations, businesses can proactively shape strategies that protect financial, operational, and reputational assets,” she noted. “Smarter climate adaptation unlocks agility and positions companies to lead in an increasingly volatile world.”
Investor sentiment also supports action. According to PwC’s 2024 Global Investor Survey, 68% of institutional investors believe that companies should take more proactive steps to reduce supply chain risks linked to environmental factors.
As the semiconductor industry continues to fuel global digital transformation, ensuring a stable and sustainable supply of copper will be essential. The report concludes that failure to adapt could expose chipmakers to cascading supply chain failures, cost increases, and reputational risks—threatening not just individual businesses, but broader technological and economic progress.
