Russia, Ukraine, gas and chips. Like a sudden suspension of evaluations on semiconductors
Two Ukrainian suppliers of neon gas suspended your activity. How will this affect the semiconductor industry?
What is neon and why is it important
Neon is a rare gas used for lasers in scanners that make chips for monitors and televisions. Gas itself is not produced on a large scale, it is a by-product of the metallurgical industry.
According to Reuters, the ranges of vaccines against two Ukrainian companies – Ingas and Cryoin. According to Techcet, Ukraine is 90% imported unavailable to the US. It is important to note that the majority of gas in Ukraine has been slightly refined, and is extracted and delivered from Russia.
Current events persist that the shortage of neon, which continues during the pandemic, will worsen.
Before the suspension of production, Ingas produced products not only for customers in Taiwan, China, Japan and Germany, and 75% of the company was from the semiconductor industry. Production facilities of Ukrainian companies in Odessa and Mariupol. It is already known that it cannot control current orders. Equipment can be damaged, preventing a quick resumption of production even after the conflict de-escalates.
Cryoin Business Development Director Larisa Bondarenko said that neon prices are under pressure due to the pandemic, and have already increased by 500% since December.
With a rapid rise in prices due to geopolitical urgency has already encountered earlier. According to US international trade statistics, neon prices rose 600% ahead of Crimea’s annexation by Russia in 2014.
What about production in other regions?
According to Richard Barnett, marketing director of Supplyframe, companies in other countries could get the means to produce neon. It can take anywhere from 9 months to 2 years to ramp up production.
Angelo Zino of analytics firm CFRA, who may be reluctant to do so given temporary supply issues.
In China, the synthesis of neon is established, but the country began to sharply raise prices. Since the end of October 2021, the price per cubic meter of gas has increased 4 times: from 400 to 1600 yuan in anticipation of 2022.
Thus, it is now impossible to quickly replace Ukrainian. The supply chain in the semiconductor industry the next pressure.
In turn, the Semiconductor Industry Association (SIA) at the end of February announcedthat impossible limits on the amount of gas are taken into account. According to the association, the Council has a wide range of associations of metals and gases.
And also palladium
Palladium is used in chip transistors and for exchange for packages. According to Techcet, 35% of US palladium supplies come from Russia, where it is produced by Norilsk Nickel. The risks for the semiconductor industry are not so great here: the US also buys palladium from Canada and South Africa, and partially covers it themselves. There are also no direct meetings regarding Norilsk Nickel.
Briefly about the main
• The more factories in Ukraine, the greater the risks for the semiconductor industry: it is necessary to look for sources of new proposals, raw material prices justify.
• Metals supplied in Russia also have an impact on management, but currently no ownership rights are granted.
• Against the backdrop of all the risks, the final cost of products may increase.
• Semiconductors are needed by almost all sectors of the economy, although to varying degrees. Rising prices for products can lead to even greater growth in cultivation. For semiconductor manufacturers, an increase in the offer and production time is a negative point, which can be leveled by price increases.
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