Silicon Will Not Be in Short Supply in the Next Few Years

China dominates the silicon market and is continuing to expand its capacities. Global production capacity is likely to far exceed demand for the raw material for solar cells and semiconductors by 2027.

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After oxygen, silicon is the most common element in the earth's crust. It can be found in pure form or dissolved in the form of silica in the world's oceans. However, the elemental semiconductor is most commonly found as quartz - a mineral made of silicon and oxygen, SiO2 for short. The silicon is melted out of the quartz at temperatures of around 2,000 °C in a very energy-intensive process. The production costs for silicon therefore depend crucially on regional electricity prices. This is also one of the reasons why silicon is mainly produced in one country: China, despite its global availability.

Silicon is indispensable for the production of silicones or certain aluminum alloys. The availability of the raw material is also particularly critical for the production of solar cells and semiconductors. As with a number of other raw materials, Europe is largely dependent on China. The question also arises as to whether there is even enough suitable mineral quartz - quartz sand is unsuitable - and sufficient capacity for the production of raw silicon for the global expansion of solar energy production.

Production Capacity for Silicon Twice as High as Demand

The German Mineral Resources Agency (Dera) has now examined this question as part of a study and has come to the conclusion that the supply of silicon will far exceed demand in the coming years - both for raw silicon and for polysilicon and ferrosilicon. In consultation with market participants from Germany, Iceland, Norway and Australia as well as industry associations from China and Brazil, Dera has analyzed the expected market development up to the year 2027.

China will already dominate the global market for raw silicon in 2022 with a share of around 75%, ahead of Norway (6.3%), Brazil (5.1%) and the USA (3.0%). The German smelter RW Silicium in Lower Bavaria has a share of 0.6% with its production. A total of 4.3 million tons of silicon were produced worldwide in 2022. However, production capacity was significantly higher at 7.2 million tons and is expected to increase further to 12 million tons by 2027, with China accounting for almost all of the capacity expansion. According to Dera estimates, production capacities are likely to more than double demand in 2027. The current low silicon prices are therefore likely to persist.

Four Times as Much Polysilicon as Demanded

China also dominates the global market for polysilicon, which is produced from raw silicon, with a share of 83%, followed by Germany with Wacker Chemie (7%) and the USA (6%). By 2027, production capacity is expected to quadruple to 5.9 million tons compared to 2022, exceeding the expected global demand by a factor of four. With its production capacities, China is the leader in the area of 9N-grade polysilicon, which is used for the production of monocrystalline solar silicon. In contrast, 11N - 12N grade polysilicon for the production of monocrystalline semiconductor silicon is only produced by four companies in Germany, the USA, South Korea and Japan.

Ferrosilicon was produced in 33 countries in 2022, but China accounted for 70% of production volumes, followed by Russia (7%), Norway (4%) and Brazil (3%). The German company ASK Chemicals Metallurgy has a global market share of 0.2 %. Global capacities for the production of ferrosilicon amounted to 13.5 million tonnes in 2022. According to Dera, smelter capacity utilization was 60%. Due to the large overcapacity, there are only a few projects to increase production capacity.