According to Xinhua News Agency, since the Russian army launched a special military operation in the Donbass region on the morning of the 24th, the Russian army has carried out attacks on many locations in Ukraine. Ukrainian President Zelenskiy said in his speech on the morning of the 25th that as of now, 137 people have been killed in Ukraine and another 316 people have been injured.
As Russian forces officially launched a special military operation against Ukraine, the regional situation has become increasingly confusing under the rumble of gunfire, casting a shadow over the global chip manufacturing industry. For the automotive industry, which was plagued by a lack of cores last year, the conflict between Russia and Ukraine is likely to make the problem of core deficiency that has just begun to rise into the abyss again.
Russian military vehicles drive in the Crimea region on Feb. 24. The picture is from Shangguan News
Ukraine has mastered the key raw materials for chip manufacturing
"The Russian-Ukrainian region is an important producer of rare gases such as neon, krypton and xenon, Russia is responsible for crude gas separation, Ukraine is responsible for refining and exporting, and Ukraine supplies 70% of the world's neon, 40% of krypton and 30% of xenon. These three gases are the materials used to make the chips. CMB International pointed out in the research report.
Noble gas refers to the gas element corresponding to all group 0 elements on the periodic table, also known as inert gas, which is chemically stable and difficult to produce chemical reactions with other substances, so it is widely used in the semiconductor industry. For example, argon is used in plasma deposition and etching processes, neon can be used for chip fabrication and high-pressure neon lamp filling, and helium is used for cooling, plasma treatment, and leak testing in electronics manufacturing.
In the supply chain of noble gases, Russia and Ukraine occupy an important position. It is reported that Russia's rare gas resources are abundant, while Ukraine inherits the Soviet Union's iron and steel metallurgy and air separation (air separation) and other industrial technologies, has a solid gas refining equipment foundation, gas refining level ranks among the forefront in the world. The Russian-Ukrainian conflict may have a huge impact on the supply of rare gases to the global semiconductor industry.
Supply chains are in doubt, and the White House warns
In addition to rare gases, some of the organic compounds needed by semiconductor manufacturers and the supply chain of rare metals are also in Russia. According to Techcet, a market research institute in the United States, many semiconductor manufacturers rely on materials from Russia and Ukraine. The report points out that Russia is an important source of perfluorobutadiene (C4F6) gas required by the US market; more than 90% of the semiconductor grade neon supply in the United States comes from Russia and Ukraine; Russia is also an important source of palladium, accounting for about 42% of the global market share, and palladium is an important metal needed to manufacture sensors and memory.
Joe Pasetti, vice president of global public policy at the International Semiconductor Equipment and Materials Association (SEMI), sent an email to members this week assessing exposure to critical chip manufacturing supplies, pointing to potential supply disruptions for raw materials such as C4F6, palladium, helium, neon and scandium, Reuters reported.
At the same time, the White House has warned the chip industry to ensure supply chain diversification to prevent Russia from retaliating against the threat of U.S. export restrictions and preventing access to key raw materials.
Cut off, or price increase?
Will the supply of noble gases and other raw materials be cut off as a result of the Russian-Ukrainian conflict? Judging from the current judgment of industry insiders, the supply should not be cut off, but a sharp price increase is probably doomed. The original global core shortage crisis has not been alleviated, and the problem of core shortage is bound to be further aggravated.
In fact, with the impact of the epidemic and chip shortage, the price of rare gases has been rising since the second half of 2020. The price of neon gas (content of 99.99%) in the mainland has risen from more than 600 yuan / cubic meter in October 2021 to more than 1700 yuan / cubic meter at present, and the average price of krypton gas in the market has risen from more than 10,000 yuan / cubic meter to more than 30,000 yuan / cubic meter, both of which have increased by about 3 times. As the Conflict between Russia and Ukraine escalates, the price of noble gases is expected to continue its upward trend.
However, for the supply chains of chip and semiconductor manufacturers, the current sense of crisis does not seem to be strong. According to Reuters, Intel spokesman William Moss said: "The company does not expect the neon supply to be affected in any way. ”
This confidence comes mainly from semiconductor companies' strong inventory reserves. Ren Lu, a senior analyst in China's specialty gas market, pointed out: "At present, there is no problem at all in the normal use of rare gas stocks of global semiconductor companies for 6 months. ”
However, considering the current global chip supply and demand situation, the supply of rare gas is still worth vigilance, once the upstream supply is reduced, downstream fabs seeking alternative suppliers often take more than half a year to verify, affecting wafer capacity. Techcet expects demand for materials such as helium, neon, palladium, scandium, C4F6 and other materials to grow by more than 37% over the next 4 years, and Intel, Samsung and TSMC have recently released new products in Ohio, Arizona and Texas, all of which will boost demand for materials.
The automotive industry needs to compete for "gas"
For rare gases that may be reduced in supply and may be cut off in extreme cases, the mainland currently has a certain ability to resist risks. However, considering that foreign head enterprises already have a strong first-mover advantage, the domestic is still a catch-up posture, and domestic substitution will take time.
"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 it is no longer a technology that can 'card China's neck'." Ren said that even if the external supply chain is interrupted, China can organize emergency production to ensure supply in the domestic market.
However, the availability remains to be verified. According to the data of China Industrial Economic Information Network in 2019, the three giants of Linde Group, Air Liquide france and Air Chemical of the United States occupy more than 70% of the global industrial gas market share, while the largest domestic company Hangzhou Oxygen shares only account for 1% of the global market share, leaving aside liquid oxygen, liquid nitrogen and other large products, rare gas production capacity is difficult to compare with the global head enterprises.
For the automotive industry, which has experienced the pain of missing cores for more than a year, many car companies have been painfully determined, penetrated upstream of the supply chain, directly found chip factories and fabs to cooperate, and gradually recovered from the lack of cores. However, as the Russian-Ukrainian conflict once again dusts the chip supply, it also puts forward a deeper level of requirements for car companies: do they need to continue to penetrate upwards from first-tier suppliers such as chip factories and fabs, and incorporate the risk of raw materials into the consideration of supply chain risks? At present, this kind of deeper consideration and further upstream "gas" action is necessary to strengthen the anti-risk ability of enterprises.