Silver demand under pressure: Solar use drops and AI thesis wobbles – Mining.com.au

Silver is facing the victimhood of its own supercharged success in its biggest industrial demand sector as solar panel makers thrift and substitute the red metal for the white.
Silver bulls say the sheer volume of demand from electronics, including data centres, will offset solar panel manufacturers’ thrifting and substitution.
But Jeffrey Christian, MD of leading research firm CPM Group, sees a far more complex picture. And his contrarian concerns about the data centre thesis have been further validated by events in the days since Mining.com.au spoke with him.
Between 2020 and 2024 solar panel manufacturers’ consumption of silver more than doubled from about 82 million ounces (Moz) to roughly 197 million per annum as the world — particularly China — switched to renewable capacity at a record rate.
That made photovoltaics (PVs) the largest single industrial application of silver and a major reason the metal’s market kept falling into deficit, Metals Focus and the Silver Institute figures indicated, while more shortfalls were forecast.
But, as silver was starting its streak up the price charts, its demand from PVs fell 6% to 186Moz in 2025.
It is projected to tumble another 19% in 2026 to roughly 151Moz as manufacturers reduce the amount of the precious metal used in each solar cell.
Silver’s importance to solar comes down to its periodic table leading electrical conductivity and its high levels of resistance to oxidation.
StoneX Financial Head of Market Analysis Rhona O’Connell explains this. StoneX Financial is a subsidiary of StoneX Group (NASDAQ:SNEX).
“The same electrical output from copper would need copper loadings 25% higher than that of silver, all else being equal,” O’Connell says.
In simple terms that means if a solar panel needs, for example, 100 grams of silver to function properly, it would need 125 grams of copper to do exactly the same job.
But at current prices, on a weight basis, silver is worth about US$2.13 ($2.99) a gram compared with only about US$0.015 a gram for copper.
O’Connell also notes the supply side.
“After an explosion in demand for solar cells over the past decade, the consensus is that in terms of electrical output, 2026–28 is likely to be flat,” she says.
“In the next couple of years, especially as solar cells are in oversupply, certainly in Europe, we should expect silver demand to fall and then most likely stabilise,” O’Connell says.
Christian says CPM Group’s estimate has been that over the next 10 years silver would lose about half of the solar panel industry.
“And we’re also looking at continued thrifting and substitution away from silver in jewellery and electronics,” he says.
Electronics, Christian says, is a “huge catch-all”.
“I mean, when you flush the toilet in the public bathroom now, there’s electronics in there. And the use of electronics in automobiles in industrial process equipment and consumer products is just enormous. Plus it continues to grow as we’ve seen with the AI data centres,” he says.
When speaking with Mining.com.au last week, Christian sounded an early alarm over the growth of data centres.
“There’s been an acceleration [with data centres] although that could end any moment given some of the political opposition to AI that’s going on, as well as financial market starting to re-examine its rush into investing in AI,” he says.
Since that interview, Anthropic CEO Dario Amodei has called on AI firms to slow down the development of AI.
His comments came a few days after AI researcher Jacob Coxon, who left OpenAI to join Anthropic, left the sector, accusing both companies of “gambling with our lives”.
Then OpenAI boss Sam Altman, who has now put OpenAI’s IPO plans on hold, and Elon Musk, who owns xAI, chimed in to agree with Amodei.
Christian points to more signs of froth: “There’s been a lot of financial transactions within the industry where the companies are lending to subsidiaries of themselves. It’s very similar to what we saw with Enron when it blew up 26 years ago.”
The collapse of the giant US energy company and would-be broadband investor was closely linked to the ‘tech wreck’ of the early noughties, and Christian says that carries a warning about silver inventories.
“If you go back to the late 90s there was this enormous tech boom and companies were buying enormous amounts of silver bearing electronic equipment,” he says.
“Then when the bust came in 2000 there was a massive amount of unused unsold silver bearing inventory on the part of electronic component manufacturers, and that stuff hung over the market for years.
“By the time demand had picked up enough again, newer tech had made those components obsolete and they had to be melted down for their silver [and gold, platinum, and palladium] content.
“The same thing probably will happen with the AI boom. It will go bust and there’s going to be this enormous amount of equipment with precious metals that can be refined and recovered hanging over the market.”
Christian also cautions against some of the estimates put about on how much silver is in various products.
“The way auto, electronics, and other industries work is that, for the most part, subcontractors buy the precious metals and make components, which then get sold to the large companies,” he says.

“You can’t go to a company like Boeing (NYSE:BA) and say ‘how much silver are you using in a 747?’ because they don’t know.”
He says the company at the top of the production chain could say, for example, how many sensors were in a plane, but not the amount of silver within the sensors.
An example he cites for overenthusiastic guesstimating is when some silver fans were saying there were 500 ounces of the metal in a Tomahawk missile, but CPM Group’s independent research found there were only 10–15 ounces.
While Christian may be bearish on silver’s industrial demand, he says its role as a precious metal makes its outlook complicated.
“Insofar as silver is a financial asset the prices have been rising very sharply and probably will continue to rise because investors are buying it as a safe haven and a portfolio diversifier,” he says.
“And when silver mine production costs less than US$20 an ounce and the price is about US$65 an ounce you’re going to see an increase in mine production as you did in the 1980s into the 1990s. You’ll also see a reduction in silver use wherever possible in fabricated products and increase in secondary supply.
“It’s a very complex issue and there are a lot of people who like to simplify it, but when you simplify things you overlook important details, and that costs you money.”
Write to Christina Wagstaff at Mining.com.au
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