Climate change induced water stress and future semiconductor supply chain risk

Climate change is a driver of water stress risk globally. Semiconductor manufacturing requires large volumes of water. Existing research at the intersection of water stress risk and semiconductor manufacturing offers snapshots of current conditions but has not investigated how future climate scenarios may impact semiconductor supply chain security. This study combines location data for semiconductor manufacturing facilities with data on specific customer-supplier networks and with data for global water stress risk under three climate scenarios for the years 2030 and 2040. Results suggest that 40 percent of existing facilities, 24-40 percent of facilities under construction, and 40-49 percent of facilities announced since early 2021 are in basins of high- or extremely high water stress risks in 2030 and 2040. Network dynamics mean that water stress risks could cascade from individual firms or regions of concern to systemically throughout the network, thus negatively impacting semiconductor supply chain security globally.