One-third of global semiconductor supply at climate risk by 2035: PwC

The global semiconductor industry, projected to exceed US$1 trillion by 2030, faces a mounting threat from climate change as critical raw materials such as copper become increasingly vulnerable to drought and extreme weather. According to a new analysis by PwC, released on 8 July 2025, around one-third (32 per cent) of semiconductor production could rely on copper supplies at risk of climate disruption by 2035, a share that could rise to nearly 60 per cent by 2050 if emissions remain unchecked.

The findings, published in PwC’s Protecting People and Prosperity series, highlight the urgent need for semiconductor manufacturers and copper miners to strengthen supply chain resilience in the face of accelerating climate risks.

Copper’s critical role in chip production faces climate pressure

Copper is essential in producing semiconductor circuits, which underpin technologies from smartphones to electric vehicles and industrial machinery. However, PwC’s report warns that copper mines around the world are increasingly exposed to drought risk, threatening the stable water supplies needed for extraction and processing.

Currently, Chile is the only major copper source for semiconductors facing severe drought conditions. But PwC projects that within the next decade, mines in the majority of the 17 countries supplying the semiconductor industry will encounter similar drought risks. By 2035, at least 34 per cent of copper supplies critical to semiconductor production could face disruption from drought.

PwC’s analysis traced copper supply chains for the five largest semiconductor-producing nations, mapping trade data to identify major mines and assess their exposure to climate-driven drought. The study defined severe drought risk as any location projected to spend at least 20 per cent of time in severe drought conditions, a threshold that may underestimate the full extent of future disruption.

The trillion-dollar industry’s resilience challenge

Semiconductors have become indispensable to the modern digital economy. As PwC notes, they are essential not only for consumer electronics but also for powering artificial intelligence, cloud computing, electric vehicles, and renewable energy systems. The sector’s projected growth to US$1 trillion by 2030 is built on complex, globalised supply chains that are increasingly exposed to environmental risks.

According to the press release, companies are beginning to recognise the urgency of the threat. Semiconductor manufacturers are investing in material innovation, such as developing alternative materials or more compact circuits, diversifying suppliers, and adopting circular economy approaches through recycling. Copper miners, meanwhile, are exploring ways to secure water supplies, including building desalination plants, improving water efficiency, and increasing recycling of water within operations.

PwC’s 2024 Global Investor Survey suggests that nearly 70 per cent of investors believe companies should do more to mitigate supply chain risks related to climate change. Yet the firm argues that efforts so far remain uneven and insufficient given the accelerating pace of climate impacts.

Building climate resilience across supply chains

PwC’s report calls on companies to approach climate change not just as an environmental issue but as a clear commercial risk. It recommends that business leaders identify vulnerabilities throughout their value chains, collaborate with suppliers to manage risks, and reduce over-reliance on single commodities or sourcing regions.

Lynne Baber, PwC’s Global Deputy Sustainability Leader, emphasised in the release that businesses can unlock competitive advantage by proactively managing these hidden risks. She argued that smarter climate adaptation strategies could enhance agility, inspire innovation, and protect financial, operational and reputational value in an increasingly volatile world. By making climate resilience a strategic priority, semiconductor makers and their suppliers can help secure the critical components that power today’s digital economy and ensure they are prepared for the growing challenges posed by climate change.