Hurricane Helene exposes the tech industry’s fragile supply chain

Among the dire reports of damage from Hurricane Helene in the southeastern United States was one about Spruce Pine, North Carolina, population 2,194 (as of 2020 census). The city was hit hard. One resident reported that the water treatment plant “was washed away.” Many of the city’s old riverside brick buildings are gone, and mud is everywhere.

Just north of Spruce Pine is what could easily be considered a single point of failure in the supply chain that makes the modern high-tech world possible. There two companies mine quartz so pure that it is suitable (after some refinement) for the high-temperature crucibles that are used to melt silicon.—melting point 1414 degrees C or 2577 degrees F. I’m referring to the silicon destined to be turned into silicon wafers, the basis for modern electronics and photovoltaic solar cells. The crucibles must be made of ultra-pure quartz so that they contain no impurities that could destroy the silicon. High-end ultra-pure quartz has no more than 80 molecules of impurities for every billion molecules of silicon dioxide, the chemical formula of sand that turns into quartz in the earth’s crust under high pressures and high temperatures.

It turns out that Spruce Pine produces most of the ultra-pure quartz in the world. Exactly what percentage is a closely held secret in a small, secretive industry. The largest producer, Sibelco, announced that operations had ceased at its Spruce Pine mines effective September 26.. Quartz Corp. also announced a same-day closing. It is not known how long the operations of the two companies will be stopped.

The tech industry is putting on a brave face and saying their operations were not affected. The problem is not one for current production. There are already plenty of crucibles. The problem will come with the skyrocketing expansion of the tech industry and its need for ever-increasing supplies of silicon wafers for all those AI-related chips, solar cells and Internet-of-Things devices for which demand is growing rapidly.

There are other sources of ultra-pure quartz, but they should be developed. Alternatively, purification methods could be developed or expanded to make ultra-pure quartz from not-so-pure quartz. All of this would come at a cost and could mean increased costs for the industry. But these alternatives are not available at the snap of a finger. The time lag could be considerable. Mines can take years to discover, permit and build. Better purification methods could be developed quickly or take time. Whether they do or not, the cost can end up being prohibitive.

What’s really amazing is that despite a warning shot — a fire shut down production in Spruce Pine in 2008 — the tech industry has done little to diversify its supply. This is not an isolated problem. Tantalum, an element widely used in electronics, especially mobile phones, comes mostly from the Democratic Republic of Congo and Rwanda.. The political and social unrest in these countries would seem to recommend the development of alternative sources.

About 80 percent of the world gallium—a metal used in semiconductors, LEDs, Blu-ray technology, cell phones and pressure sensors for touch switches—comes from China. At the end of last year China has announced a ban on the export of technology for processing gallium and other rare earth elementspresumably to protect its status as the world’s dominant supplier. China appears to be preparing to restrict exports of these items with a new reporting system for such exports. It currently controls nearly 90% of global refined production.

None of this will come as a surprise to long-time readers who have been reading my commentary on critical mineral supplies for the past 15 years. (This recent example But events that reveal dangerous supply problems keep surprising industries that depend on critical minerals and governments, too, who only recently understood that the market cannot solve all problems.

In fact, I think human society would be more robust with fewer silicon chips running it. But this is not a widely shared view. Until it is, the tech industry and governments around the world will have their hands full trying to keep the silicon party going in the face of emerging disruptions and limits on critical materials—limits due to either geology or human-caused chaos and/or policies.

By Kurt Cobb via Resource information

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