Update 10.4.24: Tae Kim of Barron’s reports that through an effective risk management system and close partnerships with suppliers, chipmakers currently do not anticipate any significant impact from Hurricane Helene. Kim writes:
Spruce Pine, a town in rural North Carolina slammed by Hurricane Helene, plays a critical part in the chip-making supply chain. But fears about a serious disruption to global chipmaking following the storm may be overstated. […]
According to Vince Beiser, author of The World in a Grain, the two companies’ Spruce Pine mines provide 70% to 90% of the world’s production of high-purity quartz used for the semiconductor industry.[…]
But in a bad scenario, where the mines are offline for months, the chip industry may be insulated. “The significance of supply disruptions from the [Spruce Pine] mines is exaggerated,” Dylan Patel, chief analyst at SemiAnalysis said.
Patel added that the raw wafer companies had months of inventory, there are other countries that have high-purity quartz mines, and there are methods to purify lower-quality quartz or create synthetic quartz crucibles.
The world’s largest makers of chips don’t seem worried. “We are not affected” by the quartz mine closures, Samsung Electronics said when asked for comment.
A Taiwan Semiconductor Manufacturing Co. spokesperson said in a statement that the chip manufacturer has a global procurement strategy with a diverse set of suppliers. “Through an effective risk management system and close partnerships with suppliers, we currently do not anticipate any significant impact on the company’s operations,” the spokesperson said.
Read more here.
Originally posted 10.2.24: Hannah Erin Lang of MarketWatch reports that closures from damage caused by Hurricane Helene could lead to supply-chain bottlenecks — and price increases — for the chips used in smartphones, computers, and cars. Lang writes:
A tiny mining town in western North Carolina was among those battered by Hurricane Helene — and the damage could have serious implications for the massive tech-industry supply chain that relies on it.
The mines in Spruce Pine, N.C., about an hour outside of Asheville, produce a unique kind of high-purity quartz used in semiconductor manufacturing. The town is the only place in the world where the uniquely high-quality mineral can be found in such large quantities and produced for such a low price.
The two companies that operate the mines in Spruce Pine said they’ve shut down local facilities as widespread flooding, power and communications outages plague Appalachia in the wake of the storm. […]
“You’re talking about the southern Appalachian mountains, with a lot of unique geological features. Economically, this deposit is one of the most important on earth.”
– Yinan Wang, Geologist
It isn’t uncommon for one of the many ingredients in the semiconductor-manufacturing process to be primarily sourced from just one geographic location, said Peter Hanbury, a partner at Bain & Co. with expertise in semiconductor manufacturing.
But even among such places, Spruce Pine stands out.
“In this case, with 80 to 90 percent [of the global supply] coming from this one location, there’s not a lot of great other backup plans,” Hanbury said. […]
“If we see it takes six to nine months to get production back up, then we think there’s a risk,” he said.
There just aren’t many viable, naturally occurring alternatives to the quartz you can find in Spruce Pine, Hanbury said.
Read more here.
