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How digital breakdowns affect supply chains — and endanger the global economy
Dabo Guan is a professor of climate change and low-carbon transition at Tsinghua University, Beijing, China, and at University College London, UK.
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Software-related problems have caused massive delays at transport hubs. Credit: Hesham Elsherif/Anadolu via Getty
Global supply chains depend on flows of information as much as they do on flows of goods1. Digital designs for products are shared across continents. Inventories and production schedules are managed using algorithms. Payments and logistics are orchestrated through data platforms.
When these data exchanges fail — because of outages, congestion or cyber incidents — the ensuing disruption propagates among suppliers and customers2. Huge economic losses can result, even if there is no physical damage.
For example, in 2024, a faulty software update from cybersecurity firm CrowdStrike crashed millions of Microsoft Windows devices and triggered a global information-technology outage. Flights, hospitals and payment systems were halted, and firms on the Fortune 500 list of the biggest US companies by revenue lost US$5.4 billion. Digital downtime costs the world’s 2,000 largest businesses $400 billion each year, according to analytics firm Oxford Economics.
Yet, information flows are not tracked systematically. Nor are they included in the core instrument used by national statistical offices to map supply chains in the economy: the monetary input–output table3. This matrix traces the value of material inputs flowing between industries, but doesn’t capture energy, data or computational resources. Similarly, firms account for what they spend on information technology, but not for the data, computation and electricity on which their operations depend.
This omission is becoming a growing problem as digital technologies, including artificial intelligence, reshape economies, and as threats to energy grids, digital connectivity and cybersecurity escalate. For instance, in April 2025, a massive electricity blackout across Spain and Portugal that took half a day to fix cut Internet traffic to 17% of normal levels and froze electronic payments, at a cost of €1.6 billion (US$1.8 billion). Around one dozen subsea telecommunications and power cables in the Baltic Sea have been damaged in suspected sabotage incidents since late 2023.
Here I set out how firms and nations can build a practical statistical tool to track essential digital data.
Energy, computation and information flows are intertwined (see ‘Hidden connections’). Businesses, especially those with high power requirements such as data centres, increasingly choose where to locate themselves on the basis of access to clean, cheap and reliable sources of electricity. In the United States, Microsoft signed a 20-year agreement in 2024 to restart the Three Mile Island nuclear plant in Pennsylvania to power its data centres. In China, the national East Data, West Computing programme is steering data centres towards western provinces, which are rich in renewables5.