By now we do not need to remind our global wide Supply Chain Matters readership audience of the rather significant shortages of semiconductor devices along with the production and revenue risk implications impacting high tech, automotive and a bunch of other industries.
But in all things related to cascading supply network disruption, there is increasing realization of new, potentially more significant disruption that is impacting the downstream lower tiered supply potentially involving multiple industries.
Bloomberg reports that shortages compounded by significant price hikes of silicon metal supplies utilized to produce many other metalized components are threatening to add more disruption and heartburn to multi-industry supply management teams.
According to the report, the worsening situation has already prompted some companies to declare force majeure in existing silicon metal supply contracts and some are now suspending new business.
The shortage has been compounded by the ongoing electrical power restrictions being posed among China’s commodity producers and manufacturing firms. Reportedly, prices for silicon metal have shot up 300 percent in less than two months.
The irony is that silicon makes up 28 percent of the earth’s crust by weight and thus should be plentiful in supply. Except of course, in the need for mining and refining the metal for high purity needs, which involves high energy consumption.
The report makes note of the reality that high purity silicon metal is required not only for semiconductor production, but as a catalyst to produce aluminum castings, solar photovoltaic panels used to capture solar energy and in specialized silicon carbide composition semiconductor devices utilized in powering electric powered vehicles such as in Tesla’s various car models.
The report additionally cites industry experts as indicating that current high demand levels for the metal were already outpacing available supplies. Now, elevated prices are expected to remain into the middle of 2022.
Bottom line- this is yet another challenge for multi-industry supply management teams and their respective chief supply chain officers to tackle. Such ongoing cascading events are a further impact to existing product margins, and added concerns that global supply chains will damp a post-COVID economic recovery.
To end with an analogy- global supply chains and supporting services infrastructure are increasingly hyper-ventilating
Apologies in advance for messing up your weekend.