Report: One-third of global chip supply under threat by 2035

 

chip supply

Report: One-third of global chip supply under threat by 2035

A report by Brightwater indicates that climate change could disrupt a third of the world's semiconductor supply by 2035.

Severe drought threatens the extraction of copper—a key material used in chip production—according to the report.

Extracting copper, which is essential for constructing the microscopic wires found in semiconductor circuits, requires significant water resources.

The report, citing data from Australia's Commonwealth Scientific and Industrial Research Organisation, stated that approximately 1,600 liters (423 gallons) of water were required to produce just 19 kg of copper.

Chile, the largest producer, which contributes 7% of global semiconductor production, faces a significant risk of severe drought.

However, PricewaterhouseCoopers predicts this figure will rise to 32% by 2035 and 58% by 2050 in a worst-case scenario, as climate risks increasingly impact major producers, including China, Taiwan, Japan, South Korea, and the United States.

According to the International Copper Association (ICA), approximately 28 million tons of copper are consumed annually.

While semiconductors account for only a small fraction of this amount, modern chips play a vital role in the global economy, according to the Center for Strategic and International Studies (CSIS).

Semiconductors are an integral part of consumer electronics, including computers and smartphones.

According to the report, the chip industry is expected to reach $1 trillion by 2030, driven largely by advances in artificial intelligence.

“Semiconductors are the hidden lifeblood of modern technology,” said Glenn Byram, president of Brightwaterhouse’s global semiconductor business in South Korea. “It’s hard to think of a company that doesn’t rely on semiconductors in some way.”

Adding to the challenge, demand for copper in other sectors, such as electrical wiring and solar energy, is expected to rise due to increased use of computing power and clean technologies.

Global demand for copper is expected to grow by more than 40% by 2040, outstripping supply, according to a May report by the United Nations Conference on Trade and Development.

In 2023, China, a major consumer of semiconductors, emerged as the world’s largest importer of copper ore and unrefined copper, accounting for 60% of total demand.

To mitigate climate challenges, Price Waterhouse reported that some copper-producing countries are working to improve production efficiency, recycle water, and invest in desalination plants to increase their supply.

The report noted that chip manufacturers are also exploring alternatives to copper—such as silver or carbon-based nanomaterials—and are working to design more efficient and smaller circuits while diversifying their supply sources.

Recycling also plays a crucial role. About a third of global copper consumption in 2022 was sourced from recycled materials, according to the International Copper Study Group.

The report, citing the International Copper Association, noted that "copper is one of the few materials that can be reused without any loss of performance, making it an excellent candidate for recycling."

In addition to copper mining, drought also poses a significant risk to the water-intensive silicon chip manufacturing process.

In 2021, an unusual drought placed tremendous pressure on the Taiwanese government to ensure the continued operation of Taiwan Semiconductor Manufacturing Company, the world's largest chipmaker.