Advanced Materials in the Electronics Supply Chain

The electronics industry is accustomed to rapid change and innovation. Disruption is the industry’s middle name. Over the past few years, we have seen a series of trends – from AI-driven automation to reshoring efforts – reshaping the industry’s supply chains. However, as we look ahead, one trend deserves more attention than it’s been getting: the role of advanced materials in electronics supply chains.

While discussions about supply chain resilience, cybersecurity and digitalization capture the headlines, the importance of advanced materials is quietly growing. These materials – from new alloys to cutting-edge composites and nanomaterials – are critical for the next wave of technological advancements in areas like quantum computing, advanced semiconductors and next-generation batteries.

The Growing Demand for Specialized Materials

The demand for advanced materials – including topological insulators, graphene, solid-state electrolytes, perovskite materials and rare earth elements – is growing as technology marches forward. According to IndustryARC™, the advanced materials market is forecast to reach $2.1 trillion by 2025, growing at a CAGR of 4.5% from 2020 to 2025 (these numbers are for specialized materials across industries, not just electronics).

The electronics industry is constantly expanding the boundaries of what these materials can do. Quantum computing, for instance, requires materials with unique quantum properties – such as superposition and entanglement – not to be found in traditional electronic components. Similarly, the development of next-generation batteries depends on materials with higher energy densities and faster charge-discharge cycles.

As companies become dependent upon these special materials, securing a reliable supply is critical yet challenging. Many of these materials are rare, difficult to extract and/or require complex manufacturing processes. Creating these materials involves several processing steps that are often performed in different countries, making them highly vulnerable to disruptions. This adds a layer of risk to the electronics supply chain that is not always fully appreciated. 

How Advanced Materials are Used in Modern Electronics

The Impact of Geopolitical Tensions

Geopolitical factors complicate the situation. Many advanced materials are sourced from sensitive, unsafe or unstable regions. For instance, rare earth elements – including neodymium, dysprosium, praseodymium, samarium and terbium – are essential for many high-tech applications. Yet, China controls around 60 to 70 percent of global production. This concentration of supply creates a potential choke point for the global electronics industry, especially with ongoing U.S.-China trade tensions.

Governments and enterprises are working to diversify sources of these materials, but these endeavors are expensive and take a lot of time. New mining operations and processing facilities take years of development, and the environmental impact of such activities brings into play additional obstacles. Despite the challenges, companies that invest early in securing alternative sources or developing substitutes for these materials will likely find themselves in an advantageous position as demand grows.

Reshoring and Localized Production

Reshoring, the trend of bringing manufacturing closer to home, is intertwined with the supply of advanced and rare materials. As American companies move product production back to the U.S., they will need to ensure a stable supply of the specialized materials required for advanced manufacturing.

Advanced materials often require specialized knowledge and infrastructure that are not to be found in many regions. This means that even as manufacturing moves closer to home, most manufacturers will still need to rely on global supply chains for some of the raw materials and components that go into their products.

Sustainability and the Supply Chain

Consumers and regulators are demanding greener products, pushing the electronics industry to find ways to source materials more sustainably. This means developing new, easier-to-recycle materials that have a smaller environmental footprint. For example, the push for more sustainable batteries has led to research into materials like solid-state electrolytes, which promise higher performance and fewer environmental problems than today’s lithium-ion batteries. However, these materials are still in the early stages of development, and scaling them up to meet industrial demand will take some time.

The Circular Economy & Advanced Materials

As the electronics industry faces increasing pressure to address both supply chain challenges and environmental concerns, the concept of a circular economy is gaining traction. A circular economy model emphasizes the reuse, recycling and sustainable sourcing of materials, which is especially important for advanced materials that are often rare, expensive and/or environmentally taxing to extract. Companies are exploring ways to reclaim and recycle advanced materials from end-of-life electronics, reducing dependency on volatile global supply chains.

Incorporating a circular economy approach into supply chain strategies mitigates the risks of material shortages while also reducing the environmental footprint associated with mining and manufacturing. For example, closed-loop recycling systems for rare earth magnets can help reduce reliance on fresh material sources. Innovations in recycling technologies are enabling more efficient recovery of these valuable materials, providing a more sustainable alternative to mining.

Enterprises incorporating circular economy thinking into their material sourcing and usage will position themselves to better meet regulatory demands and boost supply chain resilience. As the demand for advanced materials continues to grow in the years to come, the electronics industry must collectively embrace a circular economy perspective to ensure a more sustainable and reliable supply of these valuable resources.

Preparing for a Material-Centric Future

The role of advanced materials in the electronics supply chain will only become more prominent in the years ahead. As companies continue to innovate, the demand for these materials will grow, putting pressure on supply chains that are already stretched thin. To stay ahead of the curve, companies must invest time and resources to secure a reliable supply of these unique materials. This could be through direct investments in mining and processing facilities, partnerships with suppliers, or research into alternative materials. Manufacturers can build long-term competitiveness in an increasingly challenging global market by giving advanced materials the attention they deserve.