One Metal, Big Trouble: Is the World Headed for Another Chip Crunch?

Copper, an Essential Material in Chip Manufacturing, Faces Severe Climate Challenges

Copper is an indispensable material in semiconductor manufacturing, used to produce billions of tiny interconnects in chips. However, this critical resource is now facing severe threats from climate change. According to a new report by PwC, by 2035, around 32% of global semiconductor production capacity could be affected by copper supply disruptions, with the level of risk projected to be four times higher than today—primarily due to water shortages constraining copper mine outputs.

As reported by Reuters, PwC highlighted that Chile, the world’s largest copper producer, has already seen output decline due to water scarcity. By 2035, most of the 17 major copper-producing countries that supply materials for the chip industry are expected to face drought threats.

PwC further warned that countries including China, Australia, Peru, Brazil, the United States, the Democratic Republic of the Congo, Mexico, Zambia, and Mongolia could all be impacted by climate change, and no major semiconductor manufacturing region will be spared.

While alternative materials are being actively researched, copper remains irreplaceable in terms of cost and performance. PwC emphasized that unless material innovation can keep pace with climate pressures—and unless affected countries can ensure stable water supplies—the risk of future supply disruptions will continue to grow.

The report stressed that regardless of how quickly the world reduces carbon emissions, "by 2050, around half of the global copper supply will be at risk."

During the previous global chip shortage, caused by surging demand during the pandemic and factory shutdowns that fractured supply chains, the semiconductor-dependent industries—including automotive—suffered significantly.

Glenn Burm, a PwC project lead, cited U.S. Department of Commerce data, stating: “That chip crisis cost the U.S. 1% of its GDP and Germany as much as 2.4%.”

Although countries like Chile and Peru have begun addressing the challenge by improving mining efficiency and investing in desalination plants to stabilize water supplies, PwC praised their efforts while noting that such solutions are not feasible for landlocked nations without access to the sea.

According to PwC's estimates, 25% of Chile’s copper output is already at risk of disruption, a figure expected to rise to 75% within the next decade, and potentially reaching 90% to 100% by 2050.

Source of Information: COMMERCIAL TIMES