A tropical storm, remnants of Hurricane Helene, ripped through the western North Carolina mountain town of Spruce Pine last week, disrupting quartz supply operations at both Sibelco and The Quartz Corp. Together these companies supply about 95% of the world’s ultra-high purity quartz.
This raw material is critically important to the global semiconductor industry. While some of that output can be used to make polysilicon for silicon wafer production, the true constraint lies in its use for manufacturing of ultra-high purity quartz crucibles, a must to convert polysilicon into its molten form for silicon crystal growth. Those resultant silicon forms, often referred to as silicon ingots, are subjected to multiple conversion steps to arrive at the silicon wafers needed for nearly all chip production. Additionally, this quartz is employed to fabricate equipment components necessary for various device manufacturing processes.
Both companies have issued statements that their top priority is the safety and security of their staffs, with restarting of operations being their second priority, understanding the world’s semiconductor industry is virtually solely reliant on their supply.
In a reference from Ed Conway’s 2023 book “Material World,” it is stated “It is rare, unheard of almost, for a single site to control the global supply of a crucial material. Yet if you want to get high-purity quartz — the kind you need to make those crucibles without which you can’t make silicon wafers — it has to come from Spruce Pine.”
A statement from Sibelco has noted that the hurricane has caused widespread flooding, power outages, communication interruptions, and damage to critical infrastructure in the area, with many people in the area, including employees and their families, facing displacement and significant disruptions. It could be weeks before power is restored to the mines. Further, the state of roads and railways used to access the plants and transport materials is being assessed. Some of these have been confirmed to be washed-out, including at least one railway bridge.
With many people in the area still unaccounted for, the extent of damage remains to be fully assessed, after which a recovery timeframe can be estimated.
In the meantime, alternate quartz supply might be leveraged on a limited basis, but at a much higher cost associated with purification and still not achieving the purity the Spruce Pine region provides.
Overall, we can expect resultant elevated costs to flow through the supply chain with the potential to impact the price of electronics, at least in the near term.
Lingering concerns and challenges:
TECHCET’s most immediate concerns, beyond the loss of human life and the ensuing tragedy, are access from mines to shipping routes, by rail or road. Sources indicate that forty (40) miles of railway have been damaged, which may take months to repair. Even following debris removal and necessary repairs, it is unclear whether trucking roads are a viable means of transportation, and how this would impact cost and volumes delivered from the mines.
The pandemic has taught the semiconductor industry to hold excess inventory just in case of another supply chain problem. However, this type of strategy may only sustain the supply chain for a few months and that time will be varied depending on the underlying balance of supply and demand. While excess inventory has been frequently noted across the supply chain as a constraint to certain new orders, those residuals may prove key in the end to lessening the impact of this disruption.
There are currently no other large-scale economically viable sources of supply of high purity quartz outside of the Spruce Pine area.
In addition to the impact on the semiconductor industry, Chinese solar cell makers are also considered relatively high-volume customers of both mines located in Spruce Pine. Fiber-optics also rely on this critical material.