The hurricane in the USA dealt a blow to the global chip market

Hurricane “Helen”, which hit the southeastern United States, hit the global chip market. Floods in North Carolina flooded mines where one of the key components for the production of microcircuits is extracted, writes the Financial Times on Saturday, October 5.

“Helen” found a weak link in the semiconductor supply chain: flooding at the mines halted the production of ultrapure quartz, vital for the production of microcircuits.

A week ago, the strongest hurricane in the USA (after “Katrina” in 2005) flooded the mining town of Spruce Pine. It is here that about 90% of ultra-pure quartz is produced. It's used to make crucibles that produce high-quality silicon for semiconductors.

Why chipmakers are watching Spruce Pine floods

If the mines stop for a long time, it could affect for further production of basic components for a wide range of electronics, from smartphones and computers to solar panels. The FT points out that the demand for artificial intelligence processing servers has already almost exceeded the supply of the most advanced chips.

"There are other sources of highly pure quartz in the world. But no one has yet found reserves of the same purity, the same quantity and with the same easy access. There is no real substitute for this town of 2,000 residents, Vince Beiser, author of the book "The World in a Grain" about the role of sand in the global economy, about Spruce Pine

There are alternative suppliers of quartz in Brazil, India, China and Russia – but building new supply chains is very difficult.

200% Deposit Bonus up to €3,000 180% First Deposit Bonus up to $20,000

The hurricane caused widespread flooding, power outages, communications disruptions and damage to critical infrastructure in the mine area. This was officially confirmed in the company Sibelco – to the Belgian mining conglomerate, which owns one of the mines in Spruce Pine. 

The Norwegian corporation Quartz,  the owner of another mine in the region, also does not yet name the timing of the resumption of production . 

How quartz from North Carolina’ is related to chip production

The Quartz website states that Spruce Pine is home to "the only mine on earth with quartz pure enough to produce the crucibles needed to produce semiconductor ingots. 

Silicon ingots are cut into thin wafers, on which microcircuits and transistors are printed for the manufacture of chips. Thus, quartz is extremely important for the global sector of the semiconductor industry, the volume of which is estimated at almost $600 billion.

99.999% pure quartz is required for making crucibles – otherwise, under the influence of extremely high temperatures, it can react with polysilicon, from which computer microcircuits are made. And this negatively affects the quality of chips.

Will there be enough silicon wafer stocks for a long time

Silicon wafer manufacturers GlobalWafers, Siltronic and Sumco have stocks for 3-8 months of supplies to microchip monopolists Intel, Samsung and TSMC. That's according to SemiAnalysis, a chip market consulting firm.

Analysts believe this buffer should be enough until mining resumes.

However Ed Conway , author of the book “The Material World” about the six most important substances of modern industry, is more pessimistic.

«It is hard to imagine that this will not have at least some impact. It is about the fragility of the economic basis of our life. Few people think about Spruce Pine until something like this happens, Ed Conway, author of "The Material World"