As global digital transformation accelerates, the importance of copper in the technology industry is unprecedented. It is a core conductive material for semiconductor chips, data center servers, electric vehicle batteries, and renewable energy equipment. However, a hidden concern is emerging: droughts caused by climate change are threatening the copper supply, and with demand skyrocketing, the global copper market is entering a period of unprecedented pressure.
A new report by PwC points out that without an effective response, nearly one-third of the world’s semiconductor production could be at risk from copper supply disruptions by 2035, posing a profound impact on the high-tech industry. This article will provide an in-depth analysis of the causes of the copper supply dilemma, its impact on the industry, and possible solutions.
Table of Contents
Droughts Threaten Copper Supply, Semiconductors Bear the Brunt
Climate change is altering the global resource supply landscape, with a particularly severe impact on the copper mining industry. Copper mining is highly dependent on stable water resources, and many of the world’s major copper-producing regions are experiencing worsening droughts. According to the PwC report, if climate trends continue, 32% of semiconductor production could be affected by copper supply disruptions by 2035, a proportion that is four times higher than it is today.
This constitutes a major risk for the semiconductor industry, as copper is a key conductive material in chip manufacturing, ubiquitous in everything from chip interconnects and circuit board traces to power supply modules. If the copper supply is disrupted, the entire IT and electronics supply chain will be under pressure.
Demand Continues to Grow, But Supply Struggles to Keep Up
In addition to supply risks, demand-side pressure is equally astonishing. According to forecasts by S&P Global, global copper demand will double from 25 million metric tons per year to 50 million metric tons by 2035. The drivers behind this are the rapid growth of electric vehicles, renewable energy, data centers, and the semiconductor industry.
However, developing new copper mines is not easy; it takes an average of 16 years to go into production. Even if new mines were started today, they would not be able to keep up with the surge in demand over the next decade. Even with copper recycling, the massive supply-demand gap cannot be filled.
Droughts Intensify, Increasing Risk for Major Copper-Producing Countries
Currently, only Chile is listed as a major copper supplier with a high drought risk, but PwC predicts that in a decade, most of the 17 major copper-producing countries will face drought pressure. By 2050, if there is a lack of proactive decarbonization and climate action, the proportion of copper supply at risk could be as high as 58%, with a global impact.
This means that not only mining companies need to act, but the entire supply chain, including semiconductor and technology companies, must plan ahead to reduce their dependence on a single resource.
Supply Chain Resilience: Countermeasures Businesses Should Take
PwC emphasizes that “enhancing supply chain resilience is a matter of urgency.” The following are proposed solutions from various parties:
- Mining company measures: Invest in desalination plants, improve water use efficiency, and promote water recycling.
- Semiconductor manufacturer strategies: Introduce alternative materials (such as aluminum, advanced interconnect materials), achieve supplier diversification, and promote recycling and a circular economy.
- Global cooperation: The International Energy Agency (IEA) recommends that developed countries strengthen refining capacity and establish partnerships with developing countries to jointly explore new resources.
If these measures can be implemented, they will, to a certain extent, alleviate copper supply pressure, but action must be accelerated, otherwise, future risks will be unbearable.
The Business Opportunity in Recycled Copper: Obsolete Telecom Equipment as a New Source
In the context of a tight supply, recycling offers another viable path. As telecom operators replace old copper wire communication equipment and optical fiber gradually replaces copper cables, the market may recover 800,000 metric tons of copper over the next decade, with a market value of approximately 7 billion US dollars.
While this recycled resource cannot completely solve the supply-demand imbalance, it represents a valuable market for recycled metals for businesses and is also in line with the ESG (Environmental, Social, and Governance) trend.
Impact of Price Volatility and Geopolitical Factors
Supply chain pressure is not only from natural factors, but geopolitics is also a contributing force. Recently, US President Trump announced a 50% tariff on imported copper, causing a surge in New York copper futures, which once skyrocketed by 17%, with the price per pound reaching $5.89, marking the largest single-day increase since 1989. Future policy changes and international trade disputes will further exacerbate market uncertainty.
Act Now to Avoid a Future Crisis
Copper is facing a dual challenge: rapidly rising demand and supply risks brought about by climate change. For the technology industry, this is not just a raw material problem, but a major issue of supply chain stability and production capacity security.
Businesses should start now to strengthen risk management, invest in resource alternatives and recycling, and promote a circular economy to cope with future uncertainties. As PwC states: “We can take action now, or we will pay a much higher price in the future.”
Sources:
- Climate change disrupts copper supply! The semiconductor industry faces a supply chain crisis, and companies are urgently seeking new solutions.
- Semiconductor industry could short out as copper runs dry
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