Russia’s War in Ukraine Could Spur Another Global Chip Shortage
Burned by that experience, the chip industry rushed to diversify its supply. A business called Cymer, which is owned by Dutch chip giant ASML and makes the lasers utilized to draw patterns on sophisticated semiconductor chips, attempted to reduce its consumption of neon. “Chipmakers are worried about current escalation of neon costs and supply continuity,” David Knowles, vice president and basic supervisor of Cymer, said at the time, without particularly mentioning Ukraine. Bondarenko states the cost spike in 2014 was generally caused by a fight in between competing neon producers Cryoin and Iceblick, which is no longer running. However, if access to Russian crude does end up being a problem, she says, Cryoin has enough supplies to keep production going until completion of March. If that goes out, she declares there are Ukrainian crude manufacturers that Cryoin can turn to as options.
Instead she is more anxious about getting neon out of the nation. “Borders right now are extremely overloaded as people, civilians, are trying to leave,” she states. “If the authorities of countries where our customers are situated have the ability to affect the border situation for the industrial shipments then that would be an excellent help [and] it will not impact the entire market worldwide.”
Chipmakers have actually played down how much they will be impacted by the crisis in Ukraine. “There’s no requirement to worry,” Lee Seok-hee, CEO of South Korean chipmaker SK Hynix, stated last week, including the company had “secured a lot”of products. Koichi Hagiuda, the minister of economy, trade, and industry in Japan, said Japanese chipmakers are not expecting a”major impact”on their operations due to the fact that they can source materials elsewhere. The country imports 5 percent of gases utilized in semiconductor production from Ukraine. However there are indications that despite the caution of 2014, Ukrainian neon still plays a significant role in the industry. ASML told WIRED it sources “less than 20 percent” of the neon it utilizes in its factories from Russia or Ukraine.”Along with our supplier we are examining alternative sources in case of a supply interruption from Ukraine and Russia,”a representative states. There are concerns that the US is even more susceptible. Recently, the White House advised United States chipmakers to discover alternative suppliers, Reuters reported.” We see huge amounts of imports coming into the United States from [Russia and Ukraine],”says TechCet’s Shon-Roy.”It is my informed evaluation that what’s entering the US from Russia and Ukraine might be as much as 80 to 90 percent of all [neon] imports.” US chipmaker Intel did not react to a request for comment.
But sourcing neon from elsewhere will not be simple. When the industry is already under extreme pressure from post-pandemic need, any interruption in Ukraine will strike chipmakers at a time. “The drive behind increased production is so strong that it is triggering strain in the supply chain everywhere, even without a war,” Shon-Roy includes. “So there is no excess supply of this type of gas that I know of, not in the western world.”
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When Russia annexed Crimea in 2014, the world’s chipmakers were a lot more reliant on Ukraine because the nation provided around 70 percent of neon gas. “There were delays in deliveries since of border crossing issues,” states Shon-Roy, and the raw materials required to make neon were likewise in short supply. “Russia was focusing a great deal of their efforts on war and not making steel.”
“There were hold-ups in deliveries since of border crossing problems,” states Shon-Roy, and the raw materials required to make neon were also in short supply. Bondarenko says the price spike in 2014 was primarily triggered by a feud in between competing neon manufacturers Cryoin and Iceblick, which is no longer operating. Chipmakers have played down how much they will be affected by the crisis in Ukraine.”Along with our supplier we are investigating alternative sources in the occasion of a supply disruption from Ukraine and Russia,”a spokesperson says. Any disturbance in Ukraine will hit chipmakers at a time when the market is already under extreme pressure from post-pandemic demand.