PwC: A Third Of World Chip Production Threatened With Supply Disruption Due To Climate Change In 2035

PricewaterhouseCoopers (PwC) illustration (photo: x @tax)

Jakarta The global semiconductor industry faces serious threats related to future copper supplies. The latest report from PricewaterhouseCoopers (PwC) reveals that about 32% of world chip production is at risk of disrupting copper supply due to the impact of climate change by 2035.

This figure has jumped dramatically compared to the current conditions and is expected to continue to increase, even reaching 42 to 58 percent by 2050.

Copper is the main ingredient in the manufacture of billions of small wires in each semiconductor chip. Although various researches to find alternative materials are being carried out, so far no one has been able to compete with the price and performance of copper as the main electricity deliverer in this industry.

One of the main causes of this threat is the increasingly severe drought in copper-producing countries. Chile, as the world's largest copper producer, is currently facing a water shortage that is slowing production.

The PwC report states that by 2035, most of the 17 copper supply countries for the chip industry will be at risk of drought. None of the world's chip producing regions have escaped this threat, including countries such as China, Australia, Peru, Brazil, the United States, the Democratic Republic of Congo, Mexico, Zambia, and Mongolia.

The chip supply crisis occurred several years ago due to a surge in demand during the pandemic along with the factory closure. The impact is huge, crippling the automotive industry and various other sectors that rely heavily on chips.

According to PwC, the scarcity of chips at that time caused the United States' economic growth to drop by one percent, while Germany lost 2.4 percent of GDP growth.

Efforts to overcome water shortages have been made in several countries, such as Chile and Peru, by increasing mining efficiency and building desalination factories. However, this solution is considered difficult to implement in countries that do not have access to the sea.

PwC warns that without material innovations able to adapt to climate change and better water management, the risk of disruption to copper supply will continue to increase in the future. It is estimated that about half of the copper supply in each country will be at risk by 2050, regardless of how quickly the world reduces carbon emissions.

This PwC report is a strong warning to industry players and the government to immediately take anticipatory steps, so that world chip production will not be severely disrupted in the coming decades.