Every square millimeter on a silicon wafer has fit tens of millions of transistors for a while. Since the wafer is a under a millimeter thick that's about one grain of sand. So we wouldn't have run out even with those numbers.
Also it doesn't have to be sand, exactly, and more than half the earth's crust is silica.
Leaving aside the issue of whether 1mm cubed is a good estimate for an 'average' grain, this is only an estimate of beach sand. Also it seems to be underestimating shore length by a lot, 200 million meters when other sources say 1.2 or 1.6 billion meters.
His estimate for beach surface area is 6000 square kilometers.
The sahara alone is 9 million square kilometers, with sand much deeper too. The first estimate I see, just for that one desert, is 1.5e24 grains of sand.
Another way to look at it is that we apparently use 50 billion tons of sand per year. That's less than a thousand square kilometers worth of sahara. And making 10^22 transistors with 2012 tech would take only 750 thousand tons of sand.
