After making landfall in Florida on the evening of September 26, Hurricane Helene has severely impacted the 10 states it swept through. According to US officials, this is the second deadliest storm in the US in 50 years, after Katrina.

Helene also forced the closure of two mines in Spruce Pine, North Carolina, owned by SCR-Sibelco and Quartz, which produce about four-fifths of the world’s highest-quality quartz. Quartz is a key ingredient in semiconductor manufacturing.

East Asian chipmakers are scrambling to assess the impact of the closure of a mine in Spruce Pine, a case that highlights how even small corners of today’s globalized supply chains can harbor hidden vulnerabilities.

Quartz in semiconductor manufacturing

Quartz is used in the manufacture of semiconductors and solar panels, and is used to create crucibles where silicon is heated, melted, and transformed into a single-crystal structure, creating semiconductors. It is called the Czochralski method, named after the Polish scientist who accidentally discovered the structure more than a century ago, when he dipped a pen into a molten crucible instead of a pot of ink.

Any impurities in the crucible can introduce unwanted flaws into the silicon, affecting the circuitry printed on it and increasing the risk of faulty chips. That's why quartz, which is stable at high temperatures and doesn't react easily with other materials, helps ensure the quality of the silicon.

Why is North Carolina quartz special?

Quartz from the Spruce Pine mines is some of the purest in the world, likely because the quartz formed hundreds of millions of years ago in conditions lacking water, according to Sibelco. The lack of water means fewer impurities were introduced as the mineral formed.

The rare purity of Spruce Pine quartz ensures that the silicon it produces is flawless, making it a vital part of the global semiconductor supply chain, according to journalist Ed Conway, author of Material World.

How do mine closures affect the chip industry?

The extent of the impact depends on how long it takes to reopen both the mines and transport routes with the outside world.

Chip giants Samsung Electronics, Infineon Technologies, SK Hynix and TSMC said their operations have not been significantly impacted at this time. Silicon wafer makers Shin-Etsu Chemical, Sumco and GlobalWafers are more directly affected.

Some companies are holding large inventories, but if the situation at Spruce Pine persists, they may seek to diversify their quartz supply, benefiting Sibelco and Quartz’s competitors, according to research firm SemiAnalysis.

Like surrounding areas, Spruce Pine is struggling with infrastructure damage including flooding, power outages, road closures, and communications disruptions. SCR-Sibelco and Quartz are working to reach all local employees, many of whom have been evacuated or have lost their homes.

Supply chain experts say it could take weeks for mines to resume operations, meaning chip shortages and price increases are likely as Silicon Valley giants pour billions of dollars into AI chips.

Major chipmakers have been acutely aware of the dangers of supply chain bottlenecks during the Covid-19 pandemic, as labor shortages and misjudgments of demand have left chips in short supply. Some component suppliers are scrambling to ramp up production to meet surging demand for certain chips, especially AI chips.

Spruce Pine Quartz Alternatives?

Spruce Pine quartz can be replaced by synthetic or natural quartz from Indian and Chinese suppliers, but they do not meet the crucible’s critical purity standards, according to BloombergNEF analyst Jenny Chase.

This can reduce wafer production efficiency as the crucible must be replaced more frequently, resulting in higher costs and increased product prices.

Currently, high-purity quartz is only a small component in chip manufacturing, so the increase in manufacturing costs is not large enough to derail or disrupt production in the short term.

(According to Bloomberg, CNN)