The two main Ukrainian suppliers of neon, used to power the lasers that print the circuits of the chips, had to stop their activities with the invasion of the country by Russia on February 24. Between them, they provide between 45% and 54% of the production of quality semiconductors according to the calculations of Reuters. What destabilize a sector already unable to meet all the world demand for 2 years.
Ukrainian neon production under Russian bombs
Ingas represents 15,000 to 20,000 cubic meters of neon produced per month for Taiwan, South Korea, China, the United States and Germany. Cryoin, less important, provides 10,000 to 15,000 of this gas destined to 75% for semiconductors.
In a cookie-free world, trust is key to the customer experience
These two Ukrainian companies had to cease their activities because of the ongoing fighting in the country. Based in southern Ukraine, the first is located in Mariupol, on the shores of the Azov Sea. A city besieged and constantly bombarded by Russian troops. The situation of Cryoin is hardly more enviable, located in Odessa, on the coast of the Black Sea, the city is also bombarded, even if the troops are still far from it.
Cryoin Commercial Director Larissa Bondarenko let Cryoin know Reuters that, unsurprisingly, it could not ensure its neon deliveries for March. She also said that a resumption of activity, even in the event of a ceasefire, could prove complicated. Its production tools risk being destroyed during Russian attacks and access to raw materials to purify neon will be difficult.
In 2021, chip production required less than 540 metric tons of neon, according to analyst firm Techcet. The price of gas has increased by 500% since December according to Larissa Bondarenko. The semiconductor industry, already affected by the health crisis, climatic events and other supply chain malfunctions, could have a new challenge to face. For two years, the shortage of semiconductors has had many consequences in various fields, the automotive industry, smartphones, computers, etc.
Jimmy Goodrich, vice president for global policy at the Semiconductor Industry Association (SIA), an industry body based in Washington, wanted to be reassuring to the wall street journal“ If this had happened ten years ago, we might have suffered much more than today “.
By the time Crimea was annexed in 2014, the price of neon had already increased by 600% according to the US International Trade Commission. A lesson for the industry according to Jimmy Goodrich, who has since diversified his suppliers. In February, the White House had also taken the lead on the consequences of a possible invasion of Ukraine.
The big manufacturers of semiconductors spared, what about the small ones?
Lita Shon-Roy, president of Techcet, was more reserved with Reuters. She stated that ” Bigger chipmakers, like Intel, Samsung, and TSMC, have greater buying power and access to inventory that can cover them for longer periods of time, two months or more. “. On the other hand, of ” many other chip factories do not have this type of buffer “.
As every period of shortage, the semiconductor sector now knows perfectly well, companies will seek to build up stocks as quickly as possible. A reflex which aggravates the explosion of prices and the difficulties of supply. For now, the situation is stable, but if the conflict lasts, access to neon will become a real problem.