The Russian-Ukrainian incident hit the semiconductor industry
In recent days, the conflict between Russia and Ukraine has intensified and has become the focus of global attention. The Russian-Ukrainian conflict has had a certain impact on the tense situation of the original global "lack of core tide", which has made the shortage of chip material supply chain worse. This event will cause local or short-term disturbances to the global supply of semiconductor raw materials such as semiconductor special gases and rare earths. Looking at the design and production of the entire semiconductor industry, as well as the production and sales of downstream consumer electronics machines, the Russian-Ukrainian conflict will not be enough to cause the chip supply chain to break, but chip manufacturing is less than a few hundred processes, more than a thousand, and the lack of raw materials will definitely have a certain impact on the entire semiconductor industry.
Semiconductor material supply: Russia - rare metals
Russia is a major producer of palladium. Palladium is a rare metal mainly distributed in Russia and South Africa, which account for about 3/4 of the global mineral palladium supply. The world's largest producer of refined palladium is the Russian company Nornickel (NILSY US). According to the Yangtze River Nonferrous Metals Network, the most important application of palladium (about 80%) is as a catalyst to purify the exhaust emissions of gasoline vehicles. The palladium material produced in Russia is a key material in aerospace, nuclear energy, and automobile manufacturing, and is mostly used in the back-end packaging link in semiconductors. Throughout the semiconductor field, palladium can be used as a metallization process for scenarios such as high-temperature environments, and is essential for the production of some chips, such as sensors.
Supply of semiconductor materials: Ukraine - specialty gases
Ukraine is a major supplier of semiconductor feedstock gases, including neon, argon, krypton and xenon. According to TrendForce, Ukraine supplied nearly 70% of the world's neon, 40% of krypton and 30% of the world's krypton in 2020. The above gases are used in semiconductor lithography and are raw materials for perfluorobutadiene (C4F6), ArF, KrF and other materials. Neon gas is mainly used for 8-inch wafer 250-130nm maturation process. The Russian-Ukrainian conflict could hit the region's inert gas supply, and a reduction in the supply of gas would lead to higher prices and a possible increase in chip production costs. The cost of electronic gas accounts for 5%-6% of the total cost of IC materials, which is not large, but it largely determines the performance of semiconductor devices. Neon, krypton and krypton are indispensable process gases in the semiconductor manufacturing industry, and the stability of the supply chain is extremely important.
Responses from semiconductor giants
- Micron, a major U.S. semiconductor manufacturer
According to Bloomberg, the company emphasizes that it has a large inventory of inert gases and many supply chains that will not be hit hard by the local situation.
- Taiwan Wafer Foundry United Power
A few days ago, it said that UMC has always maintained multiple sources of suppliers, not only a single source, even if Ukraine is out of stock, UMC can find alternative sources of goods in Taiwan.
- Dutch lithography giant Asmail
Asmak spokesman said Wednesday it was looking for other sources of the small amount of neon gas used at its plants in case the conflict between Russia and Ukraine disrupted supplies.
Targets: Mainly small and medium-sized enterprises
Compared with the complete supply chain and multiple supplier resources of semiconductor giant companies, small and medium-sized enterprises may not be so lucky, not only to face the risk of supply failure, but also to bear the rise in raw material prices. As early as before Russia launched an attack on Ukraine, the United States has long warned semiconductor companies that the Russian-Ukrainian conflict may lead to the supply of semiconductor raw materials, and hopes that enterprises can find alternative suppliers as soon as possible.
In addition to the risk of raw material supply, the price of specialty gases is bound to rise sharply. In the light of the 2014 and 2015 Ukraine crises, neon prices soared 600% almost overnight. The price of palladium has also risen by as much as 52% since last December. And it is likely that as the Conflict between Russia and Ukraine intensifies, prices will continue to rise.
In general, the Russian-Ukrainian conflict may affect the supply of semiconductors, but it is unlikely to cause a supply interruption or prevent global chip production, which may only lead to a small-scale resource squeeze.