The Silver Squeeze: When Tech Demand Meets Scarcity

In May 2024, silver briefly topped $32 per ounce—the highest level since 2013—on the back of record industrial demand and tight inventories. The Silver Institute estimates the global silver market ran a deficit of roughly 180–200 million ounces (Moz) in 2023, following a 2022 shortfall near 237 Moz. At the center of this crunch: the clean-energy buildout and electrification wave. Solar manufacturers alone consumed an estimated 180–220 Moz last year, while electric vehicles (EVs), 5G, AI data centers, and advanced medical products all leaned harder on silver’s unique properties.

This is the “silver squeeze”—a structural mismatch between demand growth and a supply base that cannot scale quickly. It matters now because the world is adding an unprecedented amount of solar capacity, EVs are going mainstream, and power electronics are proliferating across everything from factories to cloud infrastructure. While thrifting and substitution are in progress, the next few years will test how fast manufacturers can cut their silver intensity before the market forces prices higher and lead times longer.

Understanding the Silver Squeeze

A “squeeze” occurs when near-term supply falls short of demand, forcing users and financial shorts to bid up the price to secure material. In silver, the squeeze is not only about traders on exchanges; it’s the convergence of persistent industrial demand with constrained mine output and declining visible inventories.

• Structural demand: Industrial use now represents more than half of silver demand, led by solar photovoltaics (PV), automotive electronics, and power semiconductors.
• Limited supply elasticity: Only about 25–30% of silver comes from primary silver mines; the majority is a byproduct of lead, zinc, copper, and gold mining. Bringing new supply online often requires new base-metal projects with 7–10 year lead times.
• Inventory drawdowns: Stocks in major vaults and exchanges, including COMEX and LBMA, have trended lower from pandemic-era peaks, reducing the buffer that could otherwise absorb demand surges.

The result is a market where each incremental gigawatt of solar or million EVs has an outsized price impact. Unlike a one-off trading event, this squeeze is fundamentally tied to the electrification of the global economy.

How It Works

The mechanics of the silver squeeze are easy to visualize with the math of solar, which is currently the biggest single driver.

The solar math

• Global PV installations: Industry trackers estimate the world added roughly 420–450 GW of solar PV in 2023 and is on pace for 500+ GW in 2024.
• Silver intensity: Modern silicon PV cells use screen-printed silver paste to form front and rear contacts. While manufacturers have been thrift­ing aggressively, typical silver consumption still averages around 10–20 milligrams per watt for high-volume products, depending on cell architecture (PERC, TOPCon, HJT).
• Consumption example: At a midrange 12 mg/W, 500 GW of PV requires:
  • 500,000,000 kW × 12 g/kW = 6,000,000,000 g ≈ 6,000 metric tons
  • 6,000 metric tons ≈ 193 Moz of silver

That order-of-magnitude aligns with The Silver Institute’s 2023–2024 PV silver demand estimates.

Supply constraints

• Mine output: Global mine production hovers near 830–850 Moz annually. Recycling contributes another 170–200 Moz. Combined, total supply has struggled to exceed ~1,050 Moz in recent years.
• Geographic concentration: Mexico, China, and Peru account for a large share of production. Labor disputes, permitting, environmental constraints, and grade declines at mature deposits limit rapid growth.
• Project pipeline: New primary silver projects are relatively scarce. Ramping existing sites—like MAG Silver’s Juanicipio (Mexico) and Hecla’s Keno Hill (Canada)—helps at the margin but doesn’t close a 150–200 Moz structural gap.

Financial accelerants

• ETF flows and inventory: Inflows into silver-backed ETFs (e.g., iShares Silver Trust, SLV; Sprott Physical Silver Trust, PSLV) tighten the market by absorbing metal into vaults. Outflows do the opposite. With baseline deficits already large, even modest ETF inflows can harden a supply squeeze.
• Futures markets: When physical tightness coincides with speculative short positions, forced covering can amplify price surges. However, the 2024 dynamics are chiefly about industrial buyers—solar manufacturers and power electronics suppliers—securing feedstock.

Key Features & Capabilities

Silver’s squeeze stems from its irreplaceable physical properties in critical technologies:

Best-in-class conductivity

• Electrical: Silver offers the highest electrical conductivity of any metal (~6.3 × 10^7 S/m), enabling lower resistive losses and higher efficiency in PV cells and power modules.
• Thermal: Exceptional thermal conductivity helps dissipate heat in high-power electronics, increasing reliability and lifespan.

Reliable metallization for solar

• Screen-printing: PV makers like JinkoSolar, LONGi, and Trina use silver-based screen-printing pastes to form ultra-fine conductive fingers on cells. Paste vendors including Heraeus, DuPont (now part of DuPont MCM portfolio), and Giga Solar supply specialized formulations that allow narrower lines (e.g., sub-20 µm) and lower resistivity—raising efficiency while cutting silver usage per watt.
• Durability: Silver’s resistance to corrosion ensures long service life under harsh outdoor conditions.

High-performance bonding and switching

• Silver sintering: Power module suppliers (e.g., Infineon, Bosch, Denso) use silver sintering materials in SiC-based inverters. Compared to traditional solders, silver sinter layers handle higher temperatures and can improve thermal cycling reliability, enabling smaller, more efficient systems.
• Connectors and relays: Silver-plated contacts and alloys provide stable low-resistance switching—critical in EV drivetrains, 5G base stations, and data center power systems.

Antimicrobial effectiveness

• Medical devices and coatings: Products like Smith & Nephew’s Acticoat dressings use nanocrystalline silver for antimicrobial protection, reducing infection risk in wound care. Silver-ion coatings (e.g., from Sciessent) extend to hospital surfaces, HVAC, and water filtration.

These capabilities make silver a cornerstone of the energy transition and digital infrastructure—precisely the sectors scaling fastest today.

Real-World Applications

Silver’s ubiquity often goes unnoticed; here are tangible examples across the stack.

Solar PV manufacturers

• JinkoSolar’s Tiger Neo (TOPCon): Jinko shipped tens of gigawatts of N-type TOPCon modules in 2023. TOPCon architectures still rely on silver contacts, even as Jinko works with paste suppliers to reduce silver per watt.
• LONGi’s high-efficiency lines: LONGi’s n-type offerings target record cell efficiencies while pushing thinner fingers and lower silver loading. The company publicly emphasizes metallization optimization to control costs.
• Heraeus Photovoltaics: A leading paste provider, Heraeus has incrementally cut silver use via finer-line pastes while improving cell performance. Their roadmaps target double-digit percentage reductions in silver per watt over product generations.

Notably, First Solar’s thin-film CdTe modules sidestep the silver constraint almost entirely—a strategic advantage as they scale toward 25+ GW of U.S. capacity enabled by the Inflation Reduction Act.

Electric vehicles and power electronics

• EV silver content: The Silver Institute estimates EVs can contain 25–50 grams of silver, reflecting additional power electronics, high-voltage connectors, and sensors. With the IEA projecting roughly 17 million EV sales in 2024, that’s on the order of 425–850 metric tons of silver demand.
• Tesla and BYD inverters: EV inverters use silver-based solders and contacts in power modules for reliable high-current switching. BYD’s 3+ million NEV sales in 2023 exemplify how quickly automotive demand compounds.
• Enphase and SolarEdge microinverters: Residential solar electronics employ silver in high-reliability interconnects and switches. Enphase shipped over 10 million microinverters in 2023, a proxy for the rapid growth of power electronics in rooftop PV.

Data centers and 5G

• AI server power trains: As hyperscalers deploy tens of gigawatts of AI capacity, power distribution units, high-current busbars, and switchgear use silver-plated contacts to minimize losses and heat. OEMs like Schneider Electric and Eaton incorporate silver contacts into industrial-grade switchgear.
• 5G base stations: Ericsson and Nokia radios use silvered RF connectors and contacts for stable, low-loss performance under high duty cycles and variable climates.

Consumer electronics and healthcare

• Smartphones and PCs: Each smartphone contains a fraction of a gram of silver in solder and contacts. With over 1.1 billion smartphones shipped in 2023, even tiny amounts add up to millions of ounces.
• Medical devices and coatings: Beyond dressings, silver-infused coatings are used in catheters, implant surfaces, and hospital textiles to limit microbial growth, with manufacturers like ConvaTec and Medline supplying global health systems.

Industry Impact & Market Trends

The silver squeeze is already reshaping strategies from mines to manufacturers.

Prices, inventories, and hedging

• Prices: Silver’s move above $30/oz in 2024 reflects not just investor interest but a deeper industrial pull. Volatility has increased as buyers lock in long-term contracts and traders react to inventory prints.
• Inventories: Visible inventories in LBMA and COMEX vaults fell from peak pandemic levels and sat near multi-year lows in 2023–2024, constraining the market’s ability to buffer new demand spikes.
• Hedging and procurement: PV makers increasingly pursue multi-year offtake agreements and experiment with alternative pastes to mitigate price and availability risk. Some are dual-sourcing pastes and shifting designs to be compatible with copper plating down the line.

Mining responses

• Ramps and restarts: MAG Silver’s Juanicipio reached commercial production, Hecla ramped Keno Hill, and Mexico’s Penasquito (Newmont) resumed operations after labor disputes. These help but don’t reverse the deficit alone.
• M&A and streaming: Precious-metal streamers like Wheaton Precious Metals and Franco-Nevada provide financing that can accelerate project timelines, albeit against a backdrop of stricter permitting and ESG scrutiny.

Clean energy growth vs. thrifting

• PV boom: Global PV additions are on track to exceed 500 GW in 2024. Even as silver use per watt declines, total silver consumption can still grow if installations rise faster than thrifting.
• Cell architecture shift: HJT and TOPCon drive higher efficiencies but differ in silver needs; HJT traditionally uses more silver on both front and rear, though copper-substitution programs are advancing. PERC’s decline reduces some silver demand, but the net effect depends on the speed of copper adoption.

Challenges & Limitations

The silver squeeze is not unbounded. Manufacturers and miners face real constraints—and opportunities to adapt.

Substitution and thrifting

• Copper plating: Startups and equipment providers are making copper a viable replacement for silver in PV metallization. SunDrive, an Australian company, demonstrated lab-scale copper-plated silicon cells exceeding 26% efficiency, and major manufacturers are piloting copper electroplating lines to cut silver use by up to 90% in targeted products.
• Better pastes, finer lines: Paste suppliers claim stepwise reductions of 10–30% silver per watt with each generation, using finer screens and additives that maintain conductivity. Over a few product cycles, this compounds into material savings.
• Alternative architectures: Back-contact cells (e.g., IBC) can use less silver per watt in some implementations, and thin-film CdTe (First Solar) largely avoids silver altogether.

Recycling shortfalls

• E-waste recovery: Consumer electronics recycling recovers only a small share of silver due to diffusion across tiny contacts and solders. While jewelry and silverware can be recycled efficiently, the big growth areas—PV and electronics—are harder to recover from economically at scale.
• PV end-of-life: A wave of PV modules will reach end-of-life in the 2030s. Today’s PV recycling lines focus on glass and aluminum; recovering dispersed silver at low cost remains a challenge, though companies in Europe and the U.S. are piloting improved processes.

Supply-side realities

• Long lead times: New silver supply largely depends on new base-metal mines. From discovery to production can take a decade, often longer in stricter jurisdictions.
• ESG and water constraints: Silver mining is water- and energy-intensive. Communities and regulators are increasing scrutiny, particularly in arid regions of Mexico and Peru. Even brownfield expansions may face delays.

Market risks

• Price volatility: A sharp spike to $40+ could destroy demand at the margins, prompting faster copper substitution and causing cyclic volatility.
• Technology shifts: If perovskite tandem cells or alternative metallization paths reach mass production with little to no silver content, the long-term demand curve could bend downward faster than expected.

Future Outlook

A few plausible trajectories define what the next three to five years could look like.

Base case: Tight but adaptive

• Demand: Solar PV continues compounding, EVs reach 25–30 million annual sales by 2027, and power electronics in grids and datacenters scale with AI-driven buildouts. Industrial demand stays robust.
• Thrifting/substitution: PV silver intensity falls 30–50% from 2023 levels by 2027 as copper plating gradually enters mass production and silver pastes continue to improve. Net PV silver demand plateaus or grows modestly, depending on how fast installations rise.
• Prices: Silver trades in a higher band—say, $25–$35/oz—with episodic breakouts if inventories tighten further or ETF inflows surge.

Bull case: Substitution lags, deficits deepen

• Demand beats: If HJT adoption accelerates faster than copper substitution, and AI/datacenter buildouts outpace expectations, silver remains embedded at high intensity.
• Supply disappoints: Delays at new projects or setbacks in key mining regions keep supply flat. Deficits >200 Moz persist, pushing prices well above $35 with spikes toward $40–$45.

Bear case: Faster tech pivot

• Rapid copperization: Breakthroughs in robust, low-cost copper plating for PV go mainstream sooner than expected. First Solar-like thin-film gains market share, and perovskite-tandem manufacturing matures with alternative contacts.
• Demand eases: Combined, these bend the curve downward on silver intensity, containing price pressure.

What to watch

• PV tech roadmaps: Follow JinkoSolar, LONGi, and Trina announcements on copper plating and silver loadings, plus Heraeus and other paste vendors’ product releases.
• Inventory data: LBMA/COMEX vault holdings and ETF flows are early signals of tightness or relief.
• Mining updates: Ramps at MAG Silver, Hecla, and Newmont’s byproduct-heavy sites; any greenlights for large base-metal projects with robust silver credits.

Conclusion: Navigating the Silver Squeeze

Silver’s unique capabilities—in conductivity, reliability, and antimicrobial performance—have made it indispensable to the energy transition and digitization. That success created today’s squeeze: deficits near 200 Moz, elevated prices, and procurement anxiety across solar and power electronics. Yet the same innovation engine that drove demand is also attacking the problem through thrifting and substitution.

Key takeaways:

• The squeeze is structural, rooted in solar PV’s growth and constrained supply. Prices above $30/oz are consistent with tight fundamentals.
• Thrifting and substitution are real but gradual. Expect 30–50% reductions in PV silver intensity by 2027, not overnight elimination.
• Companies that hedge smartly, dual-source metallization, and invest in copper-compatible designs will weather volatility best.

Actionable steps:

1. For manufacturers: Audit silver exposure across products; lock multi-year contracts with flexibility for copper-compatible transitions. Pilot copper plating on select lines to de-risk the switch.
2. For supply chain leaders: Build dual-sourcing with at least two paste vendors; qualify alternative BOMs; invest in design-for-recycling to future-proof ESG metrics and recovery economics.
3. For investors: Track PV installation forecasts vs. metallization roadmaps, monitor inventory data and ETF flows, and evaluate miners with near-term, low-cost ounces and strong ESG credentials.

The trajectory is clear: electrification is accelerating, and silver sits at its heart. Whether prices settle into a new, higher normal or lurch through volatile spikes will depend on how quickly the industry can copperize critical links without sacrificing performance. In the next few years, the companies that turn the silver squeeze into a catalyst for innovation—rather than a cost shock—will set the pace for the clean-energy decade.