A report from PwC indicates that climate change could disrupt up to 32% of the global semiconductor supply chain by 2035.

This disruption is attributed to severe drought conditions affecting copper mining, which is crucial for chip production.

Chile, the largest copper producer, contributes 7% of the global semiconductor output and is currently facing drought risks.

By 2050, PwC projects that climate-related risks could affect up to 58% of global semiconductor production.

Major producers in China, Taiwan, Japan, South Korea, and the US may be impacted.

Additionally, chipmakers are exploring alternative materials such as silver and nano-carbon, along with an increased focus on recycling.

The semiconductor industry, essential for devices like computers and smartphones, is projected to reach a market value of US$1 trillion by 2030.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Semiconductor material alternatives face practical adoption challenges despite promise

While copper shortages threaten chip production, the industry has been researching alternatives like gallium nitride (GaN) and silicon carbide (SiC) that offer superior performance characteristics for specific applications 1.

Despite their technical advantages, these alternative materials face significant adoption barriers including higher manufacturing costs and production complexity compared to traditional silicon-based approaches 1.

The semiconductor materials market, valued at $67.5 billion in 2024, continues to be dominated by silicon despite ongoing research into alternatives, demonstrating the practical challenges of material transitions in a highly optimized industry 2.

Even with substantial investment in alternative materials, the transition faces geopolitical hurdles as China controls approximately 60% of global gallium production, creating similar supply vulnerabilities to those affecting copper 3.

Recent developments show promise, with a significant gallium deposit identified in Texas that could potentially support domestic US production, though commercial-scale extraction remains years away 3.

2️⃣ Water scarcity affects semiconductor production beyond just copper mining