PwC Warns Climate-Driven Drought Threatens a Third of Global Chip Production by 2035

PwC Warns Climate-Driven Drought Threatens a Third of Global Chip Production by 2035

(IN BRIEF) PwC’s latest Protecting People & Prosperity report finds that 32 percent of semiconductor output will rely on copper sources exposed to severe drought by 2035, rising to 58 percent by 2050 without emissions cuts. As semiconductors underpin digital transformation and renewable-energy deployment, the study calls on copper miners to invest in desalination and water recycling, and on chip makers to diversify suppliers, pursue material and design innovations, and embrace circular-economy practices. These measures, alongside cross-sector collaboration, are essential to safeguard global chip supply chains against accelerating climate risks.

(PRESS RELEASE) LONDON, 8-Jul-2025 — /EuropaWire/ — A new PwC analysis warns that one-third (32 percent) of global semiconductor production will depend on copper supplies exposed to severe drought by 2035—with risks climbing to 58 percent by 2050 under a high-emissions scenario. The findings, released today in the latest instalment of PwC’s Protecting People & Prosperity series, highlight how climate-driven water scarcity at copper mines threatens the US $650 billion semiconductor industry—set to top $1 trillion by 2030—and underscore the urgent need for supply-chain resilience.

Using trade data and climate projections, PwC traced semiconductor manufacturers’ copper back to 17 supplying countries and mapped each major mine’s drought exposure. Currently, only Chilean mines face “severe drought” risks; but within a decade, mines in most copper-exporting regions will be at risk of water shortages that could disrupt operations and constrain chip production.

“Semiconductors power everything from AI servers and smartphones to electric vehicles and renewable-energy systems,” said Glenn Burm, Global Semiconductors Leader at PwC South Korea. “Companies must treat climate-induced commodity risks with the same rigor they apply to market or regulatory threats. Actions such as investing in desalination, diversifying suppliers, embracing material innovation, and closing the loop through recycling are critical to secure chip supply in a warming world.”

PwC’s report recommends that copper producers and chip makers alike:

• Scale water resilience: Build desalination and water-recycling capacity at mines; improve on-site water efficiency.
• Diversify and innovate: Reduce reliance on at-risk sources by broadening supplier bases, exploring alternative circuit materials, and designing more compact chips.
• Collaborate on risk management: Engage across the value chain—miners, manufacturers, investors—to share data, co-invest in resilience measures, and develop circular-economy approaches.

“Hidden climate vulnerabilities can jeopardise financial, operational, and reputational value,” added Lynne Baber, Global Deputy Sustainability Leader at PwC. “By unearthing these risks early, businesses gain the agility to adapt, innovate, and thrive despite mounting environmental volatility.”

About the Report

The report is the latest instalment as part of PwC’s Protecting People and Prosperity (PPP) series, which quantifies climate risks to key commodities. The report examines the scale of risks to semiconductor production, by tracing the global semiconductor industry’s copper supply back to copper mines across the world and then analysing how exposed those mines are to accelerating drought in coming years. To track precisely how accelerating drought could disrupt the semiconductor industry’s copper supply, we first identified the territories that are the world’s leading semiconductor producers. Next, we used trade data to find out where the top five semiconductor-producing countries get their copper. We traced both domestic sources and imports. Finally, we located all major copper mines in each copper source country. We identified which copper mines are in a location projected to experience severe drought risk (defined as predicted to spend at least 20% of the time in severe drought; the true time in severe drought could be much higher).

About PwC

At PwC, we help clients build trust and reinvent so they can turn complexity into competitive advantage. We’re a tech-forward, people-empowered network with more than 370,000 people in 149 countries. Across audit and assurance, tax and legal, deals and consulting we help clients build, accelerate and sustain momentum. Find out more at www.pwc.com.

Media Contacts:

Imran Javaid
Global Corporate Affairs and Communications, Senior Manager, PwC United Kingdom

Dan Barabas
Global Corporate Affairs & Communications, Manager, PwC United Kingdom

SOURCE: PWC