Hurricane Helene Disrupts Global AI Chip Supply Chain by Shutting Down Critical Quartz Mines

Hurricane Helene Devastated a High-Quality Quartz Mining Town -- Here's How It Affects Everything From Smartphones to Semiconductors

Since Hurricane Helene made landfall on the Florida Gulf Coast on September 26, it has impacted six states and resulted in at least 230 deaths, making it the deadliest storm since Hurricane Katrina in 2005. The storm swept away homes, destroyed towns, and flooded a major factory that supplies intravenous fluids to hospitals. It also devastated Spruce Pine, a 2,194-person mining town in North Carolina responsible for almost all of the world's supply of high-purity quartz, a mineral essential for the semiconductors used in smartphones, laptops, and AI chips. Sibelco and The Quartz Corp. own the quartz mining operations in Spruce Pine. These two companies take the high-purity quartz mined in the area, refine it, and ship it out to manufacturers. The quartz then becomes a crucial building block for technology and ends up back in our hands within an iPhone or laptop. Related: Here's How the CEOs of Salesforce and Nvidia Use ChatGPT in Their Daily Lives Spruce Pine received over two feet of rain from Hurricane Helene, causing Sibelco and The Quartz Corp. to stop operations on September 26. At the time of writing, it was unclear when the operations would resume. "The initial assessment indicates that our operating facilities in the Spruce Pine region have only sustained minor damage," Sibelco stated on October 3. "Detailed assessments are ongoing. Our dedicated teams are on-site, conducting cleanup and repair activities to restart operations as soon as we can." Spruce Pine is the only source of high-purity quartz in the U.S.; the town produces 90% of the mined and processed quartz used in electronics. Though Russia and Brazil have their own supplies of the mineral, "Spruce Pine has far and away the [largest amount] and highest quality," economics expert Ed Conway told NPR. Most semiconductors wouldn't be functional without high-purity quartz, he stated. Related: 'Everybody Wants to Be First': Nvidia CEO Says Demand for Its Blackwell AI Chip Is 'Insane' Dylan Patel, chief analyst at research firm SemiAnalysis, said in a post on X that the supply chain disruptions from the storm have been "exaggerated." Companies have enough materials on hand, at least three months' worth, to tide them over until mining operations resume. They also have ways of synthetically purifying minerals. "High-purity quartz deposits are scarce, but purification methods exist even if they are time and resource intensive," Patel wrote.

Global chipmaking hit as Hurricane Helene disrupts quartz mining

Hurricane Helene has exposed a little-known vulnerability in the semiconductor supply chain, after flooding at mines in North Carolina halted production of ultra-pure quartz that is vital to chip manufacturing. The storm, the most deadly to hit the US mainland since Hurricane Katrina in 2005, flooded the mountain town of Spruce Pine last weekend, which experts say produces as much as 90 per cent of the world's ultra-pure quartz. This scarce mineral is used to make the crucibles in which the high-grade silicon used in semiconductors is produced. Any long-term interruption could affect downstream production of the essential components in a wide range of electronics, from smartphones and computers to solar panels. That hit would come at a time when soaring demand for servers to process artificial intelligence is already outstripping supply of the most advanced chips. "There are other sources of high-purity quartz around the world but so far nobody has found anywhere else that has the same purity, the same quantity and the same ease of access," said Vince Beiser, who visited Spruce Pine while writing his 2018 book on the role of sand in the global economy, The World in a Grain. Despite the existence of some small alternative producers in Russia, Brazil, India and China, supply chain concentration of this essential material in a small mountain town with a population of around 2,000 is "pretty crazy", Beiser said. "There's no real substitute for it." Sibelco, the Belgium-headquartered mining conglomerate that operates the largest quartz production facility in Spruce Pine, said that the area was "hit particularly hard". "The hurricane has caused widespread flooding, power outages, communication disruptions and damage to critical infrastructure in the area," Sibelco said earlier this week after halting operations on September 26, as the storm approached. The company said on Friday its recovery efforts had made "significant progress", adding: "The initial assessment indicates that our operating facilities in the Spruce Pine region have only sustained minor damage. Detailed assessments are ongoing." The Quartz Corporation, another miner in Spruce Pine, said earlier this week it was "too early to assess" how long it would take to resume production. "However, we remain confident of our ability to avoid any supply disruption for our high purity quartz customers," it said on Wednesday. The Oslo-headquartered company has described Spruce Pine as "the only mine on earth with quartz pure enough to produce the crucibles needed to manufacture semiconductor ingots". The silicon ingots produced in quartz crucibles are sliced into the thin wafers upon which transistors and circuits are imprinted to make chips, making them a fundamental building block of the $600bn semiconductor industry. The quartz used in these crucibles has to be at least 99.999 per cent pure, to avoid them reacting in intense heat with the even purer "polysilicon" from which computer chips are made. "My guess is [Hurricane Helene's disruption] will certainly mean a short-term crunch that's going to raise prices," said Beiser. As well as flooded mines, transport infrastructure in the region has been seriously affected by storm damage. SemiAnalysis, a chip consultancy, estimates that silicon wafer manufacturers such as GlobalWafers, Siltronic and Sumco have between 3 to 8 months of inventories available to chipmakers such as Intel, Samsung and TSMC. "Existing inventory is a buffer" to any disruption, its analysts said, and mining activities can "probably" restart before those are run down. But Ed Conway, author of Material World -- a book examining six of the most important substances in modern industry, including sand -- believes it could take many more months for operations to reach their previous capacity. "It's quite hard to imagine this won't have at least some impact," he wrote in a newsletter this week. "The episode also underlines . . . the fragility of the economic underpinnings of our lives. Few people spend much time thinking about a place like Spruce Pine, until something like this happens and then all of a sudden it's all important."

Hurricane Helene Will Send Shockwaves Through the Semiconductor Industry

Downpours at Spruce Pine, North Carolina have taken the biggest known deposit of high-purity quartz offline, leaving the global tech supply chain potentially starved of an ingredient vital for making microchips. Millions of people across the US South have gone without power or have been forced to evacuate following days of extreme downpours brought on by Hurricane Helene. North Carolina has borne the brunt of the devastation, with the state accounting for a third of all recorded fatalities to date. And as relief operations get underway, the eyes of the world are on a small town of about 2,000 in the western part of the state. Spruce Pine sits about an hour northeast of Asheville, Mitchell County, and is home to the world's biggest known source of ultra-pure quartz -- often referred to as "high-purity quartz," or HPQ. This material is used for manufacturing crucibles, on which global semiconductor production relies, as well as to make components within semiconductors themselves. Semiconductors are the fundamental building blocks of modern IT. Transistors, a type of semiconductor device, are the small electronic switches that perform computation functions in every tech gadget from smartphones to electric scooters, data centers, and military aircraft. They make possible the processors that power most of the world's smart gadgets. HPQ is the raw material for the high-grade quartz products and high-end products that sit at the heart of these devices. Its chemical and physical properties -- including high temperature and corrosion resistance, low thermal expansion, high insulation, and light transmission -- mean it can be used in optical communication and electronic light sources technology. HPQ drives a $500 billion microchip industry that is core to the $3 trillion global tech sector. Spruce Pine supplies around 70 percent of the naturally occurring HPQ that is needed for computing devices and products. The site's market position and significance were underlined in 2019 when a manager for Quartz Corp, one of the two main mining companies that works the deposit, told the BBC: "Inside nearly every cell phone and computer chip you'll find quartz from Spruce Pine." Quartz is the second-most abundant mineral in the Earth's crust, but while it can be found across the world, quartz reserve properties -- including a deposit's size and type -- vary by region. It is rare to find economically viable deposits of HPQ -- aside from Spruce Pine, the largest are found in India and Brazil. Another silicon material, so-called "silicon metal" -- a lower-grade and more easily accessible material that is largely sourced in China -- is also listed as a critical raw material for the silicon industry by the European Commission, the UK, India, and South Korea. But it is unclear what percentage of it is refined for use in computing. "HPQ from Spruce Pine is, in a way, more critical and valuable because of its purity," says Jonnie Penn, an associate professor of AI ethics and society at the University of Cambridge. "Its unique purity emerges out of processes that unfold over geological rather than human timescales," Penn says. "This purity requirement matters most for advanced computing systems in areas like the military, healthcare, and quantum computing." The two main companies at the Spruce Pine pegmatite complex -- roughly 40 km long by 16 km wide, according to a 1962 survey -- are Quartz Corp and Unimim, a subsidiary of the global industrial minerals company SCR-Sibelco, based in Belgium.

How Hurricane Helene Jolted the Global Chip Industry

(Bloomberg) -- Hurricane Helene caused havoc in North Carolina, killing dozens of people and stranding others, washing away homes, businesses and crops and knocking out electricity and water. It also shut two mines that together produce about four-fifths of the world's highest-quality quartz -- a crucial ingredient in the production of semiconductors. Chipmakers as far away as east Asia were hurrying to assess the impact of the mine closures in the stricken town of Spruce Pine. The incident underscores how small corners of today's globalized supply chains can contain hidden vulnerabilities. Here's more on how the closure of the mines operated by SCR-Sibelco NV and Quartz Corp. could impact chip production. What is the quartz used for? It's used in the production of semiconductors and solar panels. Quartz is used to create the crucibles where silicon is heated, melted and reformed into the single-crystal structure that makes an ideal base to create semiconductors. It's called the Czochralski method, after the Polish scientist who accidentally discovered the structure more than a century ago when he dipped his pen in a crucible full of molten metal instead of an ink pot. Any impurities in the crucible could introduce unwanted flaws into the silicon, affecting the circuitry that's printed on it and raising the risk that the chips will be defective. That's why quartz, which is stable at high temperatures and doesn't easily react with other materials, helps to ensure the quality of the silicon that's produced. What makes the North Carolina quartz so special? The quartz that comes from the Spruce Pine mines is some of the purest in the world. That may be because the quartz was formed hundreds of millions of years ago under conditions with uniquely little water, according to Sibelco. The lack of water meant that there were fewer opportunities for impurities to be introduced as the mineral was forming. The rare purity of Spruce Pine quartz helps to ensure the silicon produced will be flawless. That makes it a vital part of the global semiconductor supply chain, according to Ed Conway, a journalist who wrote about the importance of the mines in his 2023 book Material World. How will the mine closures affect the chip industry? That may depend on how long it takes to reopen both the mines themselves and the transportation links that connect them to the outside world. Chipmaking giants Samsung Electronics Co., Infineon Technologies AG, SK Hynix Inc., and Taiwan Semiconductor Manufacturing Co. have said they don't anticipate a significant impact on their operations for the time being. More directly affected are silicon wafer makers such as Shin-Etsu Chemical Co., Sumco Corp., and GlobalWafers Co., which supply to the likes of TSMC. Some of these companies have months of existing inventory, according to industry research firm SemiAnalysis. But if the Spruce Pine situation drags on, they may move faster to diversify their sourcing of quartz, benefiting Sibelco and Quartz Corp.'s rivals. Major chipmakers learned the dangers of bottlenecks in their supply chains during the coronavirus pandemic, when labor shortages and misjudgments over the level of demand created enormous backlogs that have only recently been fixed. The industry is still under pressure, with component suppliers busy trying to ramp up production to meet soaring demand for some categories of chip, especially those needed for a new generation of artificial intelligence applications. What are the alternatives to Spruce Pine quartz? Some natural and synthetic alternatives to Spruce Pine quartz are produced by Indian and Chinese suppliers, including Jiangsu Pacific Quartz Co. and Triumph Science & Technology Co. But other quartz mines may not meet the same purity standards crucial for the inner walls of the crucibles, according to BloombergNEF analyst Jenny Chase. This can reduce the efficiency of wafer production because the crucibles have to be replaced more often. That can lead to higher costs -- which solar and semiconductor companies may then decide to pass on to their customers. For now, high purity quartz is such a small component of chip production that any increase in production costs is unlikely to be large enough to derail or disrupt production in the short term. --With assistance from Debby Wu, Edwin Chan, Mayumi Negishi and Peter Elstrom.

Hurricane Helene shuts down critical mines, endangering AI chip supply

Flooding caused by Hurricane Helene has shut down two essential mines in western North Carolina that could lead to a major disruption in the supply of AI chips. The two mines, owned by Sibelco and the Quartz Corp., are the only places in the world where a large concentration of high-purity quartz can be extracted, Ed Conway, a journalist and author of the book Material World: The Six Raw Materials That Shape Modern Civilization, told Business Insider. The quartz is used to create silicon wafers which are the main elements of semiconductors that power AI, as well as smartphones and solar panels. "If we don't have access to those mine for a long period of time, then the global supply of these silicon wafers is under threat," Conway told BI. In a post on X, Conway elaborated on an excerpt of his book, adding that the world of computer chip manufacturers is extremely reliant on the North Carolina mines. "There's a reason SP [Spruce Pine] dominates this sector: noone [sic] else can compete with its purity, consistency & quantity. Replicating that will take months. Poss yrs," he wrote in the post. Both of the mines have been shut down since last week, Bloomberg reported, as Spruce Pine received more than two feet of rainfall in less than a week, according to the Associated Press. The death toll from the storm reached more than 130 as of Monday and hundreds of roads near Spruce Pine were either partially or fully closed due to damage from the storm. In a post on Facebook, Mitchell County, which contains the town of Spruce Pine, said the damage from the storm was extensive. "A good bit of the county infrastructure has been either damaged or destroyed by floodwaters and uprooted trees and downed power lines caused by the storm. The county has no electricity service, cell service, or internet connectivity," the post read. A spokesperson for the Quartz Corp. said in a statement to Fortune that its operations were stopped for an unknown duration. "We are currently assessing the damage at all plants in U.S. From a first visual inspection, we think our assets have been rather well preserved but our ability to operate again will also greatly depend on surrounding infrastructure (power, water, roads)," the spokesperson said in a statement. A video reported by Hunterbrook Monday also showed heavy flooding at an entrance to Sibelco's operation in Spruce Pine. Sibelco did not immediately respond to Fortune's request for comment. Despite the large scale demand for AI chips and semiconductors, it's unclear when operations at the vital mines will restart. "At the current stage it is impossible to give a time for when we will be up and running. We will invest what is needed to restore production at the level we had before Helene hit us," a spokesperson for the Quartz Corp. said in an email.

Why Hurricane Helene could disrupt the semiconductor industry

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.

The Global Economy Depends on One Small Town in North Carolina -- and, Because of Helene, No One Can Reach It Now

As Hurricane Helene ripped a path of devastation through portions of western North Carolina, the storm cut off numerous towns in the area as flooding crippled roads, bridges, and communication with the outside world. The storm's impact on one tiny town there, Spruce Pine, has the potential to reverberate far beyond the Appalachian mountains. Spruce Pine, with a population of around 2,200, received more than 2 feet of rain between Tuesday and Saturday. Several users on social media have shared pictures showing buildings washed away and destroyed roads and bridges in town, making travel virtually impossible in the wake of the storm. As of Monday morning, the State Department of Transportation said there were "hundreds" of road issues around Spruce Pine, and travel in the western part of the state should be "for emergencies only." The devastation at the small town could have a global impact as it is the only known source of the purest natural quartz in the world, a key mineral used in producing semiconductors and solar panels. Writing in his book "The World in a Grain," published in 2018, Vince Beiser explains that the mineral at Spruce Pine is "the source of the purest natural quartz -- a species of pristine sand -- ever found on Earth." The quartz found in this part of North Carolina is used in crucibles to melt down polysilicon to make the base of semiconductors. Spruce Pine quartz is key to the process because it can withstand the heat needed to melt the polysilicon and has a molecular structure that will not adversely react with it. Other parts of the world, such as Russia and Brazil, have high-quality quartz, but not as pure as that found at Spruce Pine and the town is believed to have the largest supply in the world of the crucial mineral. The reliance on quartz has sparked warnings about what could happen if production is disrupted. In March 2024, a professor at The Wharton School studying artificial intelligence, Ethan Mollick, posted on X that the "modern economy rests on a single road" at Spruce Pine that leads to the quartz mines. WCNC at Charlotte also reported on the dependence on Spruce Pine, noting in March, "Experts believe if these mines stopped operating, it would lead to a 'catastrophic disruption' in the world economy that could set the entire globe back decades." Helene would not be the first time even a relatively minor disruption of quartz from Spruce Pine sent jitters through the global economy. Mr. Beiser noted in his book that in 2008 a fire in "one of the main quartz facilities in Spruce Pine for a time all-but shut off the supply of high‑purity quartz to the world market, sending shivers through the industry." Amid questions about the potential impact on the production of the mineral, the Quartz Corp, one of the two mining companies in the town, told the Verge it was "far too early to comment on the impact to high purity quartz production." Ed Conway, author of "Material World: The Six Raw Materials That Shape Modern Civilization," told NPR it is likely that companies have a stockpile of the crucibles to help ensure that a short-term disruption in supply of the quartz would not lead to production delays. The outlet reported the mining facilities did not appear to be severely damaged, according to pictures it reviewed. However, the rail line, which was the mining companies' primary method for transporting the quartz, was severely damaged. A solar expert, Johannes Bernreuter, told NPR that if there is a disruption in the supply of the ultra-pure quartz for "more than a few weeks," it could lead to a "serious problem."

How Hurricane Helene Could Disrupt Global Semiconductor Supply Chain, And Potentially Drive Inflation Higher - Applied Mat (NASDAQ:AMAT), ASML Holding (NASDAQ:ASML)

The town produces the world's highest quality quartz, a material necessary for semiconductor production Hurricane Helene landed in the southeastern United States on Thursday, causing deadly floods and billions of dollars worth of damage. The storm, which hit North Carolina particularly hard, also has the potential to disrupt the $500 billion semiconductor industry, which could cause inflation to spike higher. What Does Helene Have To Do With Semiconductors? Spruce Pine, a mining town in North Carolina, has some of the purest quartz on Earth, according to the Verge. The town's quartz is essential for semiconductor manufacturers, as it's used to produce silicon wafers, a critical component for semiconductors and chips. Footage shared to social media sites like X shows roads completely underwater in areas surrounding Spruce Pine, although the exact damage done to the town's mining operations is unclear. A spokesperson from The Quartz Corp, one of the town's mining companies, told the Verge that it's too early to comment on the storm's impact on the company's operations. Read Also: Hurricane Helene Devastates Southeastern U.S., Slamming Infrastructure And Leaving Millions Powerless So, this wouldn't be the first time a natural disaster has impacted Spruce Pine's mining operations. In 2008, a fire impeded the miner's ability to produce the town's high-purity quartz, sending "shivers" through the industry, according to Wired. But today, 16 years after the fire, semiconductors are much more pertinent to the global economy, with everything from cars to smartphones requiring advanced chips. The Context: When the COVID-19 pandemic disrupted the global semiconductor supply chain, it impeded the production flow of goods like cars and appliances, sending prices higher as supply was constrained. And while the Federal Reserve and other central banks have made progress in their fights against inflation, supply chain issues like a hurricane disrupting semiconductor production could cause inflation to rise again. In addition to the town's mining companies, semiconductor manufacturing companies that are reliant on Spruce Pine's raw materials could be impacted by the flooding. These companies include Tawain Semiconductor Mfg TSM, ASML Holding ASML, Applied Materials AMAT, and more. In addition to the disruptions potentially caused by Hurricane Helene, ongoing labor disputes with dockworkers could also impact the global supply chain and increase the prices of goods. Keep Reading: Amazon, Apple, Tesla Brace For Supply Chain Disruptions As Potential East Coast Dockworkers Strike Nears Image created using artificial intelligence via Midjourney. Market News and Data brought to you by Benzinga APIs