As the tide of Ukraine, a large neon supplier, changes, the cloud of chip shortages may still exist.
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Author | Yao Yongzhe
Edit | Bao Yonggang
In recent years, due to the continuous impact of the new crown epidemic, there has been a continuous wave of core shortages around the world, and the limited supply has led to an increase in consumer prices, which has seriously affected other industrial activities and supply chain security. Since 2022, with the slowdown of the epidemic and the "filling" of China's chip foundries, the problem of chip supply shortage has once had a tendency to be solved. But as the tide of Ukraine, a large neon supplier, changes, the cloud of chip shortages may remain lingering over the semiconductor industry for more years.
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The "last year" of the lack of core tide has changed again
Since the outbreak of the covid-19 pandemic in the world, the global industrial chain has been continuously impacted.
And the chip foundry industry is overly concentrated: According to a report by CEO Pat at Intel's 2022 investor conference, about 80% of the chip foundry industry today is concentrated in Asia. In the context of the greatly increased global demand for chips, this Asian-American and European chip supply chain is boiling. This ended up creating a "transportation bottleneck".
According to a recent report by NIKKEIAsia, due to the long-term backlog of goods in the West Coast ports of the United States, some products from Taiwan and Japan have to spend twice the price to divert to Mexico to enter the United States by land. The most important of these products is chips for American companies.
These factors add up to eventually lead to a lack of cores worldwide.
Alicia Garcia-Herrero, chief economist for Natixis Asia Pacific, pointed out that over the past two years, there have been cyclical and structural reasons for the shortage of chips. As a large number of places of work and study have been forced to move online, the demand for electronic products has never been stronger, resulting in a cyclical shortage of chips. Due to the vigorous development of autonomous driving, electric vehicles, AI and other fields in recent years, these emerging industries will compete with old consumer electronics for existing capacity, which will eventually lead to a structural shortage of chips.
In order to cope with this situation of short supply, the established semiconductor companies have responded.
The simplest trick is to increase investment in semiconductors. According to TSMC's report, its investment will reach $44 billion in 2022 to expand production capacity, which is far more than its 30 billion investment in 2021.
In China, SMIC, the leader in the chip foundry industry, also showed in the fourth quarter of 2021 financial report released in February that it will significantly increase investment in semiconductor foundry and expand production capacity to cope with the lack of cores.
Although the development of the domestic chip industry in advanced processes still takes time, its production capacity has grown quite rapidly. Coupled with the fact that the United States and European countries are stepping up the construction of new chip production capacity, some insiders once predicted that with the rapid increase in chip production in Asia and the recovery of chip production capacity in Europe and the United States from the epidemic, the problem of global core shortage in 2022 is expected to be solved.
Alicia Garcia-Herrero believes that the barbaric growth of chip capacity worldwide may eventually lead to overcapacity. Only a company like TSMC that has mastered advanced processes can finally laugh to the end in this "battle royale".
However, with the continuous intensification of the conflict between Russia and Ukraine, even the swords and soldiers have met. This situation has changed dramatically.
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Electronics: Semiconductor industry
Indispensable "straw"
Neon is an inert gas, colorless and odorless. The content in the air is only 0.2 parts per 10,000, which is a noble gas. Because neon emits an orange-red bright glow when energized, it is often used for lighting and display purposes. The orange-red neon signs we often see in our lives use neon gas.
But in addition to neon signs, neon actually has a relatively rare use: for electronic special gases in the semiconductor manufacturing industry.
Electronic special gas refers to the special purpose gas with high added value in industrial gases. It is distinguished from conventional industrial gases in terms of purity and use. The production process of special gases involves synthesis, purification, mixing and preparation, filling, analysis and testing, cylinder treatment and other process technologies, and the process is more complex. The semiconductor industry puts forward higher requirements for electronic special gases: in order to ensure the yield of semiconductor products, special gases must meet the requirements of "ultra-purity" and "ultra-purity", that is, strictly control the content of particles and metal impurities. At the same time, when mixing ratios, the highest level of accuracy of one billion is required, which makes the preparation of electronic special gas have a high technical threshold.
Ukraine, one of the protagonists of this military conflict, is the world's largest producer of neon gas. As early as the Soviet period, Ukraine was the production base of rare gases in the Soviet Union, and the neon gas produced at that time was mainly used for the manufacture of glow tubes. The IN-16 glow tube produced by its Gazotron Arsenal in the 1970s is still usable today and is a favorite tablepiece for many steampunk enthusiasts. This shows Ukraine's advanced technology in the field of rare gas manufacturing.
Today, neon gas has found a bigger stage in the field of semiconductors. In the field of excimer laser lithography in the semiconductor industry, chip etching using deep ultraviolet laser lithography requires filling a gas mixture in the critical layer of the patterned device. The composition of this laser gas is usually a mixture of more than 98% neon gas and other noble gases (argon, krypton, xenon) and chlorine.
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War is coming, and the crisis of lack of core will continue
According to statistics, Ukraine supplies about 70% of the world's neon, 40% of krypton, and 30% of the world's xenon. These noble gases are indispensable materials in semiconductor production.
With Russia's all-out offensive against Ukraine, the situation in Ukraine has fallen into turmoil. If the war continues, the global supply of noble gases could be affected by this.
The good news is that, given the ongoing tensions between Russia and Ukraine for some time, many large chip foundries have begun to deal with this possible crisis ahead of schedule. According to Reuters reported on February 23, ASML, the world's major manufacturer of lithography machines, has begun to seek a noble gas supplier that can replace Ukraine. ASML's lithography machine technology is a topic that almost all semiconductor foundries around the world cannot avoid. Its "very deep ultraviolet" technology is currently the only technical way for advanced process chip manufacturing. At present, only by relying on this technology can we complete the manufacture of advanced process chips below 10nm. According to an ASML spokesperson, although Ukraine is the world's largest producer of neon gas, less than 20 percent of the neon gas used by ASML comes from Ukraine.
In addition, micron CEO also said in an interview with Bloomberg that the current rare gas from Ukraine is not the main source of Micron, and Micron can obtain a stable supply of noble gas in Asia, Europe and North America. And Micron already has a lot of inventory.
The mainland's current special gas market is still in the monopoly of foreign leading enterprises. According to the report, the mainland currently accounts for only 12% of the domestic gas company share of the market. With the increasing demand of the chip manufacturing industry in mainland China and the increase in the instability of the current supply chain, the localization of special gases instead of imports is the general trend.
At present, although the mainland is not a large producer of rare gases, it already has sufficient production conditions. Ren Lu, a senior analyst in China's special gas market, said that China is a global steel power, and the purification technology of these rare gases has achieved a breakthrough, and the production process is relatively mature, and the shortage of rare gases will not cause a technical "stuck neck" problem.
But as the Russians launch an all-out offensive against Ukraine, the intensity of the war is likely to be unexpected. According to the latest news, Russian troops have crossed the border from Luhansk, Kharkov, Chernihiv into Ukraine, Odessa, Kiev and other places have also been fighting, and the whole of Ukraine is under the full blow of the Russian army. And according to the Russian Satellite News Agency, the Russian army launched a precision strike against the Ukrainian navy and air force, and has now completely destroyed its naval and air military forces. The dynamics of this war are now heading towards a high-intensity all-out war.
In this situation, although the major producers have prepared considerable inventories, short-term inventory supply will not solve the long-term shortage. If Ukraine is under the clouds of war for a long time, then in the long run, the global semiconductor supply chain will have to face the problem of lack of cores due to the shortage of noble gases. Leifeng Network (public number: Leifeng Network)
As early as the 2014 conflict between Russia and Ukraine, the price of neon gas soared 10 times, and the scope and intensity of the conflict between the two sides are far greater than that year, and it is still unknown how it will affect the supply of rare gases and the semiconductor industry.
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