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Climate change threatens 32% of chip industry's copper

supply by

2035-PwC report

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Risk rises to between 42% and 58% by 2050

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Main risk comes from drought affecting copper processing

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No chipmaking region spared from supply risks

By Nathan Vifflin

AMSTERDAM, July 8 (Reuters) - Some 32% of global

semiconductor production could face climate change related

copper supply disruptions by 2035, quadrupling from today's

levels, advisory firm PricewaterhouseCoopers (PwC) said in a

report for business leaders on Tuesday.

Chile, the world's largest copper producer, already grapples

with water shortages that are slowing down production. By 2035,

most of the 17 countries supplying the chip industry will be at

risk of drought, PwC said.

The last global chip shortage, fueled by a pandemic-driven

demand spike that coincided with factory shutdowns, crippled the

automotive industry and halted production lines across other

chip-dependent sectors.

"It cost the U.S. economy a full percentage point in GDP

growth and Germany 2.4%," PwC project lead Glenn Burm said in

the report, citing the U.S. Department of Commerce.

Copper miners from China, Australia, Peru, Brazil, the U.S.,

Democratic Republic of Congo, Mexico, Zambia and Mongolia will

also be affected, sparing none of the world's chipmaking regions

from risk, PwC said.

Copper is used to make the billions of tiny wires inside

every chip's circuit. Even if alternatives are being researched,

there is currently no match for its price and performance.

The risk will only increase over time if innovation on

materials does not adapt to climate change, and a more secure

water supply is not developed in the affected countries, PwC

said.

"Around half of every country's copper supply is at risk by

2050 - no matter how fast the world reduces carbon emissions,"

the report says.

Chile and Peru have taken steps to secure their water supply

by increasing mining efficiency and building desalination

plants. This is exemplary, PwC says, but may not be a solution

for countries with no access to large bodies of sea water.

PwC estimates that 25% of Chile's copper production is at

risk of disruptions today, rising to 75% within a decade and to

between 90% and 100% by 2050.