The war between Russia and Ukraine has aroused great concern in the world, and affected by the war, the global gold price and crude oil have risen sharply, and the stock market has also been turbulent. At the same time, the global chip industry has also recently heard a wail, and the stability of the industrial chain has also been affected by the situation.
According to Reuters, asma, a chip lithography giant with a market capitalization of more than $260 billion, has also recently sought other sources of neon gas supply in case the conflict between Russia and Ukraine causes supply disruptions.
Affected by U.S. export sanctions against Russia, Intel, Dell, etc. have suspended the delivery of products to Russia. TSMC, the fab foundry leader, announced that it would suspend the OEM of Elbrus chips for Russian companies, as well as suspend the export of products and all sales operations to Russia.
The epidemic has been repeated, the global chip supply is in short supply, the price has risen repeatedly, and the chip industry can be said to be vulnerable. I thought that into 2022, the situation will ease up, but I did not expect that due to the intensification of the Russian-Ukrainian crisis, the global chip industry alarm was once again sounded, and the "lack of core" haze spread.
01
Neon of Ukraine
Why does the Russian-Ukrainian conflict involve the stability of the chip semiconductor industry chain? The key lies in the Neon of Ukraine.
As we all know, in the proportion of wafer manufacturing materials, the "electronic special gas" represented by neon gas is one of the absolute protagonists, and the importance is the second consumable after silicon wafers. After all, for the lithography machine, there is no knife, and even the best master cannot carve flowers.
Source: Guojin Securities
At the same time, neon is an important raw material for generating light sources in lithography machines. Generally speaking, the shorter the wavelength of the gas, the more detailed the circuit is carved, and the more detailed the process of the chip. Neon gas, a rare gas, can not only obtain a laser with a shorter wavelength, but also because it is an inert gas, the wavelength is relatively stable. It is mainly used in semiconductor micro-shadow process, and is one of the necessary raw materials in the gas mixture required for DUV exposure.
With a high-quality light source, the lithography machine can further manufacture the chip. At present, although the production capacity of high-end products of EUV processes of a small number of head manufacturers is gradually being released, DUV still occupies a mainstream position.
According to a report released by market research firm Techcet in February 2022, Ukraine's global supply share of neon gas is as high as 70%, which is the dominant player in the global market. In addition, Ukraine's share of the global supply of krypton and xenon is also not small, reaching 40% and 30% respectively.
Distribution of exports of rare gases from Ukraine
Source: Huatai Research
These inert gases such as neon, argon, krypton, and xenon are known as the blood of the modern electronics industry. Although the cost accounts for 5%-6% of the total cost of IC materials, the proportion seems small, but it can largely determine the performance of semiconductor devices. It can be seen that electronic gas is an important raw material in the semiconductor production process.
It is no exaggeration to say that without them, the giant chip production can only press the pause button. It is understood that even the Dutch lithography giant Asmail, which stands at the top of the semiconductor industry chain, is very dependent on Ukraine in terms of electronic special gas.
Because of the war, Ukraine is now so busy that it has no effort to take care of others, and if the confrontation between Russia and Ukraine intensifies, these rare gases are likely to be cut off. This also means that the price of neon, krypton, xenon and other gases will rise sharply, although in the short term, major chip manufacturers still have inventory, but in the long run will undoubtedly push up the cost of the entire industry chain.
Remember that in 2014, the Russian-Ukrainian Crimean dispute, the price of neon gas once soared 10 times, and the major chip giants were miserable. Now the scale of the Russian-Ukrainian conflict looks even fiercer than it was then, I don't know where the neon price ceiling will rise to the top, you say the chip industry can not panic?
02
America's Hard Wound
Of course, behind the "scuffle" between Russia and Ukraine, the United States has also contributed. The US sanctions against Russia are not only a heavy blow from the economic and military levels, but also in terms of high and new technologies, perhaps the United States wants to jam Russia's neck in many ways.
However, Russia's response to the US science and technology sanctions is flat, is it difficult for Russia not to worry?
In fact, in the first few years after the collapse of the Soviet Union, Russia almost lost its chip manufacturing power, whether it was civilian or military. Chips, once they fall behind, it is difficult to catch up. Therefore, Russia's own electronics industry is not developed, the demand for chips is not high, and there is no neck that will naturally not be stuck.
At the same time, the military industry's requirements for the production of chips are not high, and Russia has two major advantages to make up for the lack and can be completely self-sufficient.
First, Russian analog circuits are very advanced and can replace chips to a certain extent. Second, Russia still has a great advantage in basic industries, and its key components are often upgraded. Therefore, although Russia's weapons look clumsy, their performance cannot be underestimated, even surpassing that of the United States.
Don't look at the underdeveloped Russian electronics industry, but after all, people are the most extensive country in the world, with rich mineral resources, coupled with the industrial base left by the former Soviet Union, creating excellent conditions for the development of the chemical industry.
In addition, Russian palladium is also an important raw material for semiconductors, mainly used in packaging, and is used in the manufacture of sensors and memory. About 30% of the palladium metal used in the United States comes from Russia.
Russia – As one of the rarest precious metals on the planet, only a few countries such as South Africa and Russia have palladium output, which is a key raw material for manufacturing industries such as automobile manufacturing, nuclear energy, aerospace and other manufacturing industries, and is used as an electroplating material for some packaging technologies.
Global palladium supply
Source: Northeast Securities
More than 90 percent of the semiconductor grade neon used in the United States comes from Ukraine. The situation in Russia and Ukraine is tense, and if Ukraine accidentally blows up several factories, then the supply of neon gas will not increase the difficulty of chip production. It can be seen that the United States is still relatively dependent on raw materials.
The United States sanctions Russia, restricts semiconductor exports, Russia will also cut off the supply of palladium metal in retaliation, with raw materials to card the neck of americans, then the tears of the United States can really only be swallowed in the stomach. Obviously, the chip raw materials will be held back will be a hard wound for the United States.
As can be seen from the statement issued by the U.S. Semiconductor Industry Association in response to the Ukraine crisis, any interruption in U.S. chip production could have a negative impact on chip manufacturing due to the U.S. high dependence on palladium and neon gas from Russia and Ukraine.
And according to a survey data released by the US Department of Commerce, by the end of 2021, the median inventory of key consumer chips of about 150 semiconductor companies around the world has dropped from 40 days to only 5 days. In response, US Commerce Secretary Raimondo issued a warning, saying that the low inventory of chips makes it completely without room for fault.
The important factor that should have flourished is now caught in the predicament of "walking on thin ice", and there is no doubt that the hegemonism of the United States is the hegemonism of the United States. The United States sanctioned Russia originally wanted to khaki's neck, but from the current situation, it is really difficult to say who can card who's neck. Maybe the chip sanctioned Russia, and it was itself who was finally pitted.
How things turn out in the end, we can only wait for time to give the answer.
03
China's opportunity
With the launch of Russia's all-out offensive against Ukraine, the intensity of this war is likely to exceed expectations. In this situation, although the major producers have prepared considerable inventories, short-term inventory supply will not solve the long-term shortage. If Ukraine continues to be under the clouds of war, then in the long run, the global semiconductor supply chain will be plagued by a shortage of rare gases.
Then, in the situation of "neon panic", everyone will turn their attention to domestic neon gas producers. Localization of substitution from chip production to the supply of chip materials will be entrusted with heavy responsibilities. In this incident, will domestic substitution usher in opportunities?
Although the production of noble gases is not high, but they have unique uses, the market is booming, providing a broad space for rare gases. Find data show that as of February 23, the domestic market neon gas price was reported at 1650 yuan / cubic meter, an increase of 65% from the beginning of the year, and has quadrupled from the low point in October 2021.
Source: find
According to SEMI, the global electronic gas market for wafer fabrication reached $4.37 billion in 2020. According to zhiyan consulting data, the scale of the mainland electronic special gas market will reach 17.36 billion yuan in 2020, and the CAGR will reach 14% in 2016-2020. According to the forecast of the Prospective Industry Research Institute, the market size of China's electronic special gases will reach 23 billion yuan in 2024. From the perspective of growth trends, there is still room for the scale of the domestic special gas market to rise in the future, and related companies will continue to make profits.
Source: China Industry Information Network
Special gases can be divided into electronic semiconductors, chemicals, medical, environmental protection, high-end equipment manufacturing and so on according to their application fields. Among them, according to the data of the Prospective Industry Research Institute, in 2018, electronic semiconductors accounted for 41% of the various downstream segments of China's special gases, which is the largest application field and the largest demand for special gases. Market demand means that the industry prosperity will also be improved.
Source: Prospective Industry Research Institute
Because the chip industry belongs to the high-tech industry with high barriers, the global competition pattern is highly concentrated. After more than 100 years of development and mergers and acquisitions in the global industrial gas market, a few gas manufacturers occupy the vast majority of the global market share. The entire global market is mainly monopolized by foreign enterprises such as Linde Group, Air Chemical, Air Liquide, dayang special acid and so on. They control more than 90% of the global market share.
Source: Open Source Securities Research Institute
At present, the electronic special gas used in the mainland still needs a large number of imports from abroad, compared with foreign enterprises, domestic special gases started late, and there is a significant gap with foreign enterprises in terms of technology, technology and equipment.
Foreign enterprises monopolize market share, and the situation in which electronic gases on the mainland are subject to people is very serious. However, with the increasing demand of the chip manufacturing industry in the mainland and the increase in the instability of the current supply chain, the localization of special gases instead of imports is the general trend.
The state has active policy support for special gases, which can also indirectly promote the rapid development of the industrial gas industry.
Source: Jinhong Gas Prospectus
At present, although the mainland is not a large producer of rare gases, it already has sufficient production conditions. China is a global steel power, for the purification technology of these rare gases has achieved a breakthrough, the production process is relatively mature, the shortage of rare gases will not cause technical "stuck neck" problems. Even in extreme cases, if the Supply Chain between Russia and Ukraine is interrupted, China can organize emergency production to ensure domestic supply.
For China's semiconductor industry, although electronic special gas has many barriers and the industry concentration is relatively high, China has also made a number of technological breakthroughs in various varieties, and some electronic special gas technology has gradually achieved localization.
In recent years, the world has suffered a wave of lack of cores, which has seriously affected the global manufacturing industry and brought great opportunities for the development of the semiconductor industry. With the "rising tide" of chip prices, the investment of primary market investment institutions in semiconductor companies is even more "endless". As of December 31, 2021, a total of 77 semiconductor companies across the country have submitted prospectuses and have been accepted, raising 106.2 billion yuan. In 2021, semiconductors will undoubtedly become a hot spot for financial capital investment.
As can be seen from the roadshow moment APP, the recent financing of semiconductor company Innosecco is 3 billion yuan, which is just a microcosm of the semiconductor industry, and the good industry has never lacked funds.
Source: Roadshow Moments APP
If the supply of Neon gas and krypton gas in Ukraine is blocked, especially the price of raw materials related to the upstream of the chip is further increased, the supply chain situation becomes more and more complicated, and the end time of the chip shortage may be delayed again, so domestic electronic special gas suppliers need to seek more development channels. Of course, this is an opportunity after all, and it is better to have than nothing.
04
epilogue
A sudden war, for the onlooker, is a testimony to history. For the global semiconductor industry, this could mean more uncertainty. Geopolitical crisis has always been an important factor in the changes in the global rare gas market, and we need to look at it rationally.
Whether it is the expansion of demand and production capacity shortage caused by the epidemic, or the rise in the price of silicon materials, or the unreasonable blind sanctions of some countries, the damage to the global supply chain, if the supply of rare gases is cut off, the chip shortage that has plagued the world for a long time is bound to intensify.
However, with the transformation and upgrading of China's industry, the development of intelligent manufacturing, aerospace, energy-saving buildings and electronics, nuclear industry and other industries, especially the rapid growth of China's chip industry, the domestic demand for rare gases will increase every year in the next five years, which will promote the development of the rare gas industry.