While it previously seemed impossible for a metal crafted from the second-most abundant element on the planet to go scarce, the current worldwide silicon metal shortage has thrown industries in for a loop. Against expectations, the sudden lack of silicon has delayed the production of everything from computer chips to car parts.

The scarcity was spurred by a production cut in China, causing prices to skyrocket 300 per cent in fewer than two months. Unfortunately, this disruption is only one of many, with China’s power crunch and tangled supply chain forcing companies to declare force majeure on failing to deliver their promised products.

The Previous Abundance of Silicon

Silicon comprises up to 28 per cent of the earth’s crust by weight, making it one of humanity’s most reliable and diverse materials. Industrialisation has resulted in increased usage, being used in concrete, computer chips, glass, car parts, and more. It can also be purified into a material conductive enough to convert sunlight to electricity, making it a crucial component of solar panels. It is also the raw material for silicone, a substance renowned for its water and heat resistance, which is regularly used in deodorants, medical implants, caulk, and many more products. 

Even though it is naturally abundant in sand and clay, recent years have brought forth warnings about the silicon shortage, given the upswing in industrial demand. Now that China has curbed production of high-purity silicon metal, what was previously thought to be an unlikely fragility has manifested itself, with the worldwide supply chain facing unprecedented delays.

The Effects of the Silicon Shortage

The silicon scarcity has proven to be problematic for many businesses. While there is still some supply, it is available at a trading price far out of reach for most companies. Manufacturers create silicon metal by heating common sand and coke in a furnace, with the price ranging between 8,000 and 17,000 yuan or around AU$1,650 to 3,570. When producers in Yunnan province were requested to cut production by 90 per cent below August levels from September to December due to electricity curbs, prices soared to as high as 67,300 yuan.

Yunnan province is China’s second-biggest producer since it contributes more than 20 per cent of the manufacturing powerhouse’s output. Sichuan, also struggling with power cuts, is in third place with 13 per cent. The top producer, Xinjiang, has not been ordered to curb their power yet. 

Higher prices for oil and in-demand metals like copper and aluminium have worsened the effects of the silicon shortage, leaving supply chains all over the world in a chokehold. Businesses will have to bear with the restraints, take the loss, or pass on the cost to customers. 

A Potential End in Sight

Silicon is also essential in aluminium alloys. It acts as a softening agent, strengthening the metal and making it less brittle when manufacturers hammer it into different products required in everything from appliances to automobiles. While this kind of supply chain disruption is nothing new to the metal industry, it will be more challenging to keep things moving, especially when prices are expected to stay at all-time highs throughout the first two quarters of next year. With demand growing from different industries, like solar power and electronic equipment, they may have to wait until the third quarter of next year for things to go back to normal.

Conclusion

The silicon shortage has upended various production processes, forcing companies to delay the delivery of their products to increasingly impatient customers. Fortunately, the situation is expected to improve next year, with high hopes that the supply chain will eventually stabilise.

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