Devastation from Hurricane Helene could bring semiconductor chipmaking to a halt

By CNN Newsource

Published October 2, 2024 9:49 AM

By Clare Duffy and Dianne Gallagher, CNN

New York (CNN) — The devastation in North Carolina in the wake of Hurricane Helene could have serious implications for a niche — but extremely important — corner of the tech industry.

Tucked in the Blue Ridge Mountains on the outskirts of Spruce Pine, a town of less than 2,200, are two mines that produce the world’s purest quartz, which formed in the area some 380 million years ago. The material is a key component in the global supply chain for semiconductor chips, which power everything from smartphones and cars to medical devices and solar panels.

But operations at the facilities have halted since Hurricane Helene tore through the southeast United States over the weekend, causing historic flooding and landslides, cutting off roads and power and endangering millions of residents.

Sibelco and The Quartz Corp, the companies that separately manage the two mines, say they shut down operations on September 26 ahead of the storm and are working to restart. But it’s not clear just how severely damaged the mines are and how long it may take to get them back up and running.

What is clear is that the facilities, like the rest of the surrounding area, are grappling with infrastructure disruptions such as flooding, power outages, road shutdowns and a lack of phone service. And, crucially, they are still trying to get in contact with all of their local employees — who make up their specialized workforce — many of whom have been displaced or have seen their homes damaged.

Supply chain experts say it could take weeks to make the mines operational again, which could mean chip shortages and price hikes at a particularly bad time for the tech industry, as Silicon Valley giants plow billions of dollars into chips to run artificial intelligence systems.

“If you wanted to identify one mine complex that is critically important to the semiconductor manufacturing industry, and also solar panel industry, it’s the Sibelco and The Quartz Corp mines in Spruce Pine,” said Seaver Wang, co-director of the climate and energy program at environmental research center The Breakthrough Institute.

Spencer Bost, executive director of Downtown Spruce Pine, an economic development organization, told CNN Tuesday that “the level of devastation here is insane.”

“We know nothing right now about damage for (the mining companies) right now, but the damage in Spruce Pine is so devastating that I’m not sure when they will have employees able to return,” Bost said. “People are hurting, properties are destroyed, there are places where the roads no longer exist … My fiancée is a third-grade teacher, and her principal got a hold of her yesterday and said basically ‘the school is gone.’”

Sibelco, the Belgian company whose Spruce Pine mine is the county’s largest employer, said in a post on its website that it had “confirmed the safety of most employees and are working diligently to contact those still unreachable due to ongoing power outages and communication challenges.”

“Please rest assured that Sibelco is actively collaborating with government agencies and third-party rescue and recovery operations to mitigate the impact of this event and to resume operations as soon as possible,” it said.

The Quartz Corp, Sibelco’s smaller but still important neighbor that’s owned jointly by a French and a Norwegian mineral company, called the fallout from the hurricane a “dramatic situation for the region” and said it has “no visibility” into when its operations might restart.

“Our focus is to ensure that our employees and their families are safe while all efforts are made to contact those which are still unreachable. In addition to this, our teams are joining the local taskforces to try to restore the most basic services and bring further supplies to Spruce Pine,” The Quartz Corp said in a statement.

A rare ingredient for a critical industry

Quartz is an essential ingredient in the semiconductor manufacturing process. And its purity is crucial to avoid damaging the chips.

“You’re building these incredibly complicated chips that have, in some cases, 100 billion transistors, 100 billion tiny little machines, on a chip that is the size of your thumbnail … One atom being out of place could mean a defect that breaks the chip,” said Gregory Allen, director of the Wadhwani Center for AI and Advanced Technologies at the Center for Strategic and International Studies.

And while quartz is abundant around the world, the kind of ultra-high-purity quartz mined in Spruce Pine is not. The Spruce Pine mines provide an estimated 80% to 90% of the world’s high-purity quartz — experts say the exact amount is proprietary and unknown — supplying semiconductor manufacturers like chipmaking giant Taiwan Semiconductor Manufacturing Company.

Some chip manufacturers may have up to several weeks’ supply of high-purity quartz to be able to continue production, but a longer shutdown at the mines will likely mean chip shortages. In some cases, purifying regular quartz can be used as an alternative, but the world doesn’t have the capacity to do that purification in high enough quantities to make up for the loss of Spruce Pine.

“I would expect there to be a pause and a disruption in the supply chain for major chip manufacturers … as they wait for these mines to reopen,” said David Bader, professor and director of the Institute for Data Science at New Jersey Institute of Technology.

What’s more, even if the mines themselves are able to reopen, they will need local infrastructure, like roads, to get the product out to customers.

A chip shortage would cause many industries to grind to a halt. The 2021 global chip shortage caused by the Covid-19 pandemic meant, for example, that car manufacturers were building nearly complete cars but couldn’t ship them because they lacked chips to power critical features, driving up car prices.

“Most of the American economy, to some greater or lesser extent, is downstream from the semiconductor industry as a critical input,” CSIS’s Allen said.

However, Wang said that despite the scale of the devastation in Spruce Pine, there is still reason for optimism.

“This mine is considered a national strategic asset, and I would imagine that the federal government is going to move hell and high water to get it up and running as fast as possible … everyone knows this mining complex is important,” Wang said.