Tungsten Supply Crisis Behind the AI Boom: Two Japanese WF₆ Producers Halt Production, Supply Chain Crisis Intensifies

On August 24, citing the views of Almonty Industries CEO Lewis Black, the global tungsten supply is facing a severe shortage. The demand for tungsten from the AI, semiconductor, and defense industries continues to grow, while China's dominant position in tungsten raw material supply further amplifies the global supply chain risks.

The U.S. Strategic Reserve had inquired about purchasing tungsten from the market this year, but due to tight spot supply, rising prices, and concerns that large-scale government procurement could disrupt the market, the related actions ultimately did not advance. Industry insiders indicate that the non-Chinese tungsten resources currently available to the West are limited, and a significant portion of the supply has already been locked in.

The supply risks in the semiconductor industry are equally prominent. Tungsten hexafluoride (WF₆) is an important material used to form micro tungsten interconnects in the manufacturing process of advanced memory chips. Japanese companies Kanto Denka and Central Glass previously supplied about a quarter of the global WF₆, but have halted production since July 1 due to their inability to obtain the high-purity tungsten powder required for production. The relevant raw materials mainly come from China, which will tighten tungsten-related exports starting in 2025.

Currently, Samsung and SK Hynix are accelerating their search for and certification of new WF₆ suppliers, with the market expecting WF₆ prices to rise by 70% to 90% in the second half of the year. Meanwhile, a Chinese company has announced plans to add an annual production capacity of 1,000 tons of WF₆.

The tight tungsten supply is also spreading to the hard alloy and tool industries in Japan, Europe, and the U.S. The price of APT (ammonium paratungstate) in Western markets remains above $3,000 per metric ton (mtu WO₃), and some companies are already experiencing shortages of raw materials. Industry experts believe that the price elasticity of tungsten demand in the short to medium term is low; even if prices rise, downstream manufacturing sectors such as automotive and aerospace will still find it difficult to reduce procurement.

It is pointed out that tungsten is not only used in defense and semiconductors; about 60% of U.S. tungsten demand and about two-thirds of global tungsten demand are used for hard alloys, including industrial products such as cutting tools and drill bits. As AI, defense, and advanced manufacturing industries expand, the importance of the global tungsten supply chain is further increasing.

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