Why Hurricane Helene could disrupt the semiconductor industry

Hurricane Helene’s path of destruction last week is still being felt in a number of states and the long-term impacts of the storm are still being assessed. Over 100 people have been reported dead from the storm so far (a number that’s expected to increase) and an untold number of homes were destroyed. Current estimates of the total damage and economic loss range from $145 billion to $160 billion.

Several industries will be impacted as a result as well, but perhaps none more so than the semiconductor field. Among the many towns devastated by Helene was Spruce Pine, North Carolina, which is a key supplier of a critical material used to make chips.

What does this mean for the industry and consumers? Here’s what to know.

How important is Spruce Pine, North Carolina, to the semiconductor industry?

There are two mines in the city that are the sources of the purest quartz on the planet. That’s a critical ingredient in the chipmaking process, as it’s used to produce silicon wafers, the base for all semiconductors, which power everything from laptops to cell phones, not to mention artificial intelligence systems.

There are no known alternative natural sources of pure quartz.

Ethan Mollick, a professor at Wharton University specializing in artificial intelligence and author of Co-Intelligence: Living and Working with AI, wrote in March that “the modern economy rests on a single road in Spruce Pine, North Carolina.”

Seaver Wang, codirector of climate and energy, at Breakthrough Institute, a global research center seeking technological solutions to environmental challenges, has echoed that sentiment, writing last August, “It’d be an understatement to say this mine is currently key to the semiconductor [and] solar PV industries.” 

How badly was the area impacted by Hurricane Helene?

Spruce Pine, located Northeast of Asheville along the North Toe River, saw two feet of rain from Tuesday through Saturday. Like much of Western North Carolina, the city saw heavy flooding and a tremendous number of trees, power lines, and more knocked down. Roads were destroyed and cars and houses washed away.

The status of the two mines is currently being determined. SiebelCo, which operates one of the mines, told Fast Company “As of September 26th, we have temporarily halted operations at the Spruce Pine facilities. … We are working closely with our local team to safely restart operations as soon as we can and are actively coordinating with local authorities and other partners to manage the situation. Our top priority remains the health, safety, and well-being of our employees, as well as ensuring the security of the Spruce Pine facility.”

The Quartz Corp, which operates the other, has issued a statement: “Operations at our facilities were stopped on September 26th in preparation of the event and we have no visibility on when they will restart. This is second order of priority. Our top priority remains the health and safety of our employees and their families.”

You can find information on how to help victims of the storm here.

Can the industry source quartz elsewhere, if necessary?

Yes, but it’s not an easy process. The quartz used to create silicon wafers needs to be pure—and removing the impurities in quartz found in other parts of the world is a difficult (and expensive) process. Worldwide, there are just 30,000 tons of high-purity quartz produced each year (which is less than the amount of construction sand produced in the U.S. in one hour, according to Wired.)

Synthetic quartz is another option, but that would mean higher prices and the alternative methods would need to be scaled up to meet the ever-growing demand.

How long will this impact the semiconductor industry?

That’s impossible to say right now, since the status of the two plants is still unknown. Fast Company reached out to Nvidia, asking if it was expecting an impact to its operations due to any damage to Spruce Pine. The company declined to comment.

In 2008, a fire in Spruce Pine impacted the semiconductor market. And experts have previously said that if the mines ever suffered catastrophic damage, the impact on the semiconductor industry could last for years. Mollick wrote that if the mines were to stop operating on a long-term basis, “It would likely [be] a few years of major disruption while techniques to generate alternatives were scaled up. But the disruption would be pretty catastrophic.”

What could this mean for consumers?

That, too, is hard to say at this point. If the mines are shut down for a lengthy period, there are concerns that it could mean shortages of certain technologies and perhaps higher prices. The supply chain issues during the pandemic give a small hint at what sort of impact a chip shortage can have, with ripple effects ranging from video game consoles to the auto industry.

Update, October 1, 2024: This article has been updated with new statements from SiebelCo and The Quartz Corp.

https://www.fastcompany.com/91200265/why-hurricane-helene-could-disrupt-the-semiconductor-industry-north-carolina?partner=rss&utm_source=rss&utm_medium=feed&utm_campaign=rss+fastcompany&utm_content=rss