Supply chain chiefs in the technology space will need to fully embrace e-recycling to address raw material shortages in the year ahead, says Deloitte.
In its Tech, Media and Telecom Predictions 2024 report, Deloitte says the supply chain sector will face “significant” raw material shortages, particularly gallium and germanium – vital minerals needed for chip manufacturing.
Deloitte says that interest in electronic waste (e-waste) recycling is likely to grow in response to these shortages. E-waste recycling is the disassembly and separation of components and raw materials of waste electronics from devices such as PCs and mobile phones.
Gallium is used in Blu-ray technology, mobile phones and pressure sensors for touch switches, while germanium is used in the manufacturing of fibre optics, as well as high-speed chips and infrared radiation. It also has many military applications, including night-vision goggles.
China is by far the biggest player in the global supply chain of gallium and germanium, producing 80% of the world’s gallium and 60% of germanium, according to the Critical Raw Materials Alliance industry body.
Despite such rich mineral resources, China is not yet able to produce the kind of advanced semiconductors that power AI technologies, and its businesses and military rely on imports of advanced chips.
In August last year China announced controls on the export of gallium and germanium.
Sino-US chips trade war still raging
It is part of a trade war with the US, that has seen the Biden administration introduce sweeping export controls to limit China’s access to US-made semiconductors.
China is now unable to buy advanced chips and chipmaking technology from US suppliers without the seller obtaining a licence from the US government.
The move was prompted by concerns in Washington that, without limiting access to US technology, China’s military could outstrip that of the US in terms of overall power.
Other countries to limit China’s access to chips and chip-making equipment include the Netherlands and Japan.
Deloitte says industries will need to mitigate supply chain vulnerabilities by focusing on e-waste recycling, and also by looking at stockpiling strategies.
Gillian Crossan, Lead Client Service Partner & Global Technology Sector Leader at Deloitte, said: “If you look at e-waste recycling from an economic perspective, it doesn’t always make complete economic sense. But if you look at it in the full perspective of scarce availability of minerals, then it starts to make more sense.
Crossan added that finding alternative sources of raw materials beyond China is also likely to be a major topic of conversation in 2024.
“When you look at supply chain, there’s no one solution,” she said. “It has to be a combination of looking at alternative supply sources… to get some of those minerals that are in short supply back into the supply chain.”
Crosnan also said that, while AI will play a key role in the creation of secure and reliable supply chains for innovation, economic success, and national security, a Gen AI chip shortage is likely to hinder progress.
“Every single client that I talk to is experimenting with AI,” she said. “And the need for AI chips in the last year has grown exponentially.”
Crossan added: “We’re predicting a little bit of an ease by the end of 2024 as more companies and producers enter the market, but in order to fuel all of this experimentation, we’re going to need the chips to support it.”
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