Written by / Qian Yaguang
Editor/ Liu Baohua
Design / Zhao Haoran
The Russian-Ukrainian war, which has attracted global attention, continues. On the 25th local time, the United Nations Security Council voted on the immediate suspension of Russia's offensive in Ukraine, but due to Russia's veto, the resolution could not be passed. The United States and the European Union have simultaneously launched sanctions against Russia.
At a time when the global core shortage problem remains unresolved, the conflict between Ukraine and Russia may exacerbate the supply problem. Rare gases such as neon and krypton are essential materials in semiconductor lithography, while palladium can be used in some encapsulation processes. At present, Ukraine is a major supplier of electronic special gases such as neon in the world, while Russia is a major exporter of palladium, nickel, aluminum and other metal materials.
As a key material for the manufacture of chips, electronic specialties such as neon, krypton and xenon play a very important role in this. According to SEMI data, the global wafer manufacturing materials market size in 2019 was about 32.8 billion US dollars, of which the electronic special gas scale was about 4.3 billion US dollars, accounting for 13%, which is the second largest consumable after silicon wafers.
Previously, during the 2015 Ukraine crisis, the price of neon gas soared 20 times, causing a supply chain crisis. This time, the conflict between Russia and Ukraine may also cause shortages and price increases in related materials, affecting global semiconductor production capacity.
The position of Russia and Ukraine in the chip supply chain
On February 1, Us raw material market research company Techcet released a report saying that due to the threat of war in Russia and Ukraine, materials such as perfluorobutadiene, neon gas, palladium and other materials used for chip production may face disruption.
According to statistics, among metal products, Russian nickel exports account for 49% of the global market, palladium exports account for 42%, aluminum exports account for 26%, and platinum exports account for 13%. Among them, palladium is an important metal required to manufacture sensors, memory, etc.
Electronic special gas is the key material for the manufacture of chips, and the manufacturing, oxidation, lithography, etching and other links of chips are inseparable from them. Among them, neon is one of the raw materials for excimer laser gases, krypton is used in the KrF lithography process, and xenon is used in the semiconductor etching process.
Ukraine supplies about 70% of the world's neon gas, and supplies about 40% of the world's krypton, and 30% of the world's krypton. These electronic special gases are mainly used in the 8-inch wafer 250~130nm mature process. 250~130nm process products include power management chips (PMIC), microelectromechanical systems (MEMS) and MOSFET components, IGBT and other power semiconductor components.
In the supply chain, neon gas is a by-product of Russian steel manufacturing, which mainly separates crude gas, while a professional Ukrainian company sources this neon gas and purifies, refines and exports it globally.
In addition, Russia, the world's largest producer of palladium metal, produced 2.6 million ounces of palladium in 2021, accounting for about 40% of global production, while about 25-30% of the world's palladium is mined by Norilsk Nickel in Siberia. Palladium is a key raw material for chips, and can be used as plating materials in some packaging processes, as well as in the manufacture of sensors and memories.
Impact on the chip supply chain
According to the U.S. Trade Commission (ITC), at one point the price of neon gas rose by 600 percent during a period of tension on the Crimean Peninsula in 2014. Many companies are turning to China, the U.S. and Canada for diversified supply.
It is reported that after experiencing price spikes, the semiconductor industry has optimized the manufacturing process and reduced the use of neon gas, but neon gas is still an indispensable gas material in production.
In the past year, the price of related electronic special gas has increased significantly. The price of neon gas has risen from about 600 yuan per cubic meter to about 1700 yuan at present, and the average market price of krypton gas has risen from about 10,000 yuan per cubic meter to about 30,000 yuan.
According to data from Flush Finance, neon gas prices have shown an upward trend since October 2021, and the overall increase after the Russian-Ukrainian incident in February 2022 has risen by 20% to 30%.
According to Baichuan Yingfu price tracking data, the price of continental neon gas (content of 99.99%) has risen from 400 yuan / cubic meter in October 2021 to more than 1600 yuan / cubic meter.
Kemet gas said: "The price of neon gas has been rising recently, and the price of neon gas has risen to about 2100 yuan / cubic meter before the war between Russia and Ukraine; since the official war between Russia and Ukraine, the company has stopped the price of neon gas." ”
Kemet executives introduced that in the neon and neon, xenon is the most expensive, especially aviation xenon, the higher the purity, the higher the price, especially the tension between Russia and Ukraine, the price will continue to rise.
TrendForce analyzed that the intensification of the conflict between Russia and Ukraine may disrupt the supply of neon gas, but in the short term, it will not cause a complete collapse of global chip production. However, the reduction in the supply of neon gas in the international market "may lead to an increase in the price of [neon] gas, which in turn will lead to an increase in chip manufacturing costs."
On Feb. 24, the industrial palladium price climbed to $2,550 an ounce, the highest price since August 2021. Bart Melek, head of commodities strategy at TD Securities, believes palladium could reach a record high of more than $3,000 an ounce last year.
The most tense of the tension between Russia and Ukraine should be Japan, South Korea, the United States and other countries. Japan produces only a very small amount of rare gases, and most of it depends on imports from Ukraine and China.
Chipmakers don't feel any direct impact, but the companies that supply them with semiconductor manufacturing materials buy gases such as neon and palladium from Russia and Ukraine. Supplies of these materials are already tight, so any further supply pressure could push up their prices, which in turn could lead to higher chip prices. A person familiar with the Japanese chip industry said.
South Korea, which used to import all of its neon gas and rely on foreign technology, has just nationalized production in early 2022. The plant built by Pohang Iron and Steel in South Korea can produce about 22,000 cubic meters of high-purity neon gas per year, which is expected to meet only 16% of South Korea's demand. Therefore, South Korea has considerable concerns about the situation in Russia and Ukraine that may reduce the supply of neon gas.
For the United States, Techcet estimates that more than 90 percent of the semiconductor-grade neon gas in the United States comes from Ukraine, and 35 percent of palladium comes from Russia. With the escalation of the conflict between Russia and Ukraine, the U.S. neon-related industrial chain will face the risk of "supply cut-off".
Market analyst firm Hi Investment & Securities said in a recent report: "Because the United States is highly dependent on Russia and Ukraine for palladium and neon gas, once the production of chips in the United States is disrupted, the production progress of a series of manufactured products (using chips) will be disrupted accordingly." ”
In addition, the severe sanctions imposed by the United States on Russia may also make noble gases and other semiconductor materials a chip for Russia's countermeasures against the United States.
According to the market research institute Jibang Consulting, from the short-term impact, although the Russian-Ukrainian conflict may affect the inert gas supply in the region, but in the case of semiconductor factories, gas supply plants are stocked, and there are still other regions of the supply, in the short term will not cause production line interruptions to affect output, but the reduction of gas supply will still cause prices to rise, chip production costs may rise.
Responses from chip companies
In response to tensions between Russia and Ukraine, Intel, SK Hynix, Micron, ASML and other manufacturers have declared that the possible shortage of materials such as noble gases and palladium will have less impact on the production of their respective products.
William Moss, an Intel corpus spokesman, said Intel does not expect the supply of neon gas to be affected in any way.
During the previous "Semiconductor Investment Revitalization Conference" in South Korea, Lee Seok-hee, CEO of South Korean memory chip maker SK Hynix, said: "We have enough inventory (of materials needed for chip production) and are fully prepared, so there is no need to worry." That is, Ukraine-related risks have no impact on its business.
South Korean chipmaker Samsung Electronics Co., Ltd. said that production is proceeding as usual, and the supply chain has not yet been affected by the Russian-Ukrainian conflict, and will continue to pay close attention to the situation, and has actively promoted the diversification of raw material channels.
U.S. wafer foundry GlobalFoundries said the war in Ukraine is not expected to pose an immediate risk and that companies have the flexibility to find resources outside of Russia or Ukraine.
Sanjay Mehrotra, CEO of U.S. storage manufacturer Micron Technology, said that the escalation of the Conflict between Russia and Ukraine highlights the complexity and fragility of the semiconductor supply chain, but its procurement of inert gas is more diversified, neon gas mainly comes from various suppliers in the European Union, the United States and Asia, Ukraine's proportion is not high, the same inventory is sufficient, I believe its inert gas supply chain is in a reasonable state.
Taiwanese chipmaker UMC also believes the Russian-Ukrainian conflict has no impact on its supply chain. Taiwanese chip testing and packaging company Riyueguang Semiconductor said its material supply remains stable "for now." Joanne Chiao, senior analyst at market research firm TrendForce, said: "Russia is not currently one of the major markets for Taiwan's foundry industry. ”
TSMC, the world's largest chip foundry, declined to comment "at this time." Taiwan's Ministry of Economic Affairs said in a statement that they had inspected Taiwan's semiconductor supply chain and found no direct impact on materials or production activities.
Malaysian chipmaker Unisem said that from the perspective of raw materials, the Russian-Ukrainian conflict is not expected to affect chip production, because the materials needed by Unisem are not from Russia, and its equipment mainly comes from the United States, Japan, South Korea, Singapore and local. Malaysia has become an important link in the chip production chain, accounting for 13% of the world's chip assembly tests and packages.
According to Reuters, asmail , the world's largest lithography machine manufacturer , said that although Ukraine is the world's largest producer of neon gas , less than 20 percent of the gas used by Asmah comes from the country , and it is considering alternative sources of neon gas used by factories in case a conflict between Russia and Ukraine cuts off supplies.
Impact on Chinese-related enterprises
From the perspective of global manufacturer layout, the main producers of electronic special gas include Air Liquide france, American air chemical products, Linde Praxair, Japan Showa Electric, South Korea's Dacheng Industrial Gas, South Korea's SK, Japan's Sumitomo, Taiwan's Lianhua Industry, etc.
According to the analysis of Guojin Securities, the probability of 8-inch/12-inch fabs in the United States and Europe being affected is larger, and non-related countries and regions such as Chinese mainland/Taiwan, South Korea, and Japan have the opportunity to benefit from the increase in market share in the short term due to the smooth access to semiconductor gases and materials.
Although electronic special gas has many barriers and the industry concentration is relatively high, at present, the mainland has also made a number of technical breakthroughs, such as nitrogen trifluoride, ultra-pure ammonia, germanane, etc. are currently supporting semiconductor materials in China's fastest replacement progress of sub-industries, and some electronic special gas has gradually achieved localization.
Guojin Securities believes that if there is a supply risk of neon, krypton and xenon in the future, the downstream fab seeking alternative suppliers will take more than half a year to verify, and will face new short-term material risks.
If the supply of Neon gas and Krypton gas in Ukraine is blocked, domestic Kemet gas and Huat gas are expected to benefit. Previously, due to the high quality requirements of electronic special gases used in semiconductor production, there were high technical barriers and material certification barriers in this field. If the supply of special gases such as neon gas is tightened, domestic chip manufacturers may introduce domestic gas materials to reduce industry barriers.
Domestic Huate gas, Kemet gas can already supply lithography gas.
Huate Gases is the only gas supplier in China certified by ASML and GIGAPHOTON at the same time, and maintains good communication and strategic cooperation with FAB customers. At present, the company's domestic photoresist gas market occupies about 60% of the market share, and the overall import period of domestic customers is accelerating.
Benefiting from the growth of electronic special gas sales, the growth of domestic semiconductor market demand, the growth of new products and customers, Huate Gas achieved a net profit of 128 million yuan in 2021, an increase of about 20% year-on-year. As of the close of A-shares on February 24, Huate Gas was quoted at 81.36 yuan per share, up 4.64%, with a total market value of 9.7 billion yuan.
According to Kemet gas executives, the company is actively promoting the progress of domestic and foreign certification. According to reports, Kemet gas system A shares can provide electronic grade neon and other special gas suppliers, with electronic special gas industry chain, upstream gas sources mainly from Sinopec, PetroChina, etc., raw materials are mainly recovered from the exhaust gas.
The latest performance forecast shows that Kemet gas will achieve a profit of 115 million yuan - 144 million yuan in 2021, an increase of 60% - 100% year-on-year; the company's performance growth is mainly due to the production and sales of liquefied gas and pentane products.
By 2021, China has become one of the world's leading suppliers of electronic special gas, with 60% of neon gas exported to South Korea, 37% of krypton exported to Japan, and 30% of xenon exported to South Korea.