It is understood that due to the current War between Russia and Ukraine, ukrainian companies Ingas and Cryoin, which supply about 50% of the world's semiconductor-grade neon gas, have recently closed production.
The shutdown of these two neon suppliers has undoubtedly cast a shadow on the normal supply of chips. Due to the coronavirus pandemic and the surge in demand for various electronic products, the global chip has not been able to get out of the shortage.
Neon gas is important for lasers that make chips. Its purity requirements are quite high, and must be refined to 99.99% purity, which is currently only achieved by a few companies in the world.
Industry insiders said that in recent years, the increase in demand for chips has made the semiconductor supply chain in an extremely tight state, and any material supply interruption will have a negative impact on chip production in the next 6 to 12 months, which may aggravate chip shortages and lead to higher prices of materials and products.
(Source: Pixabay)
Consultancy Techcet warned in early February that U.S. chipmakers were almost entirely dependent on Ukraine and Russia for their neon needs. If the situation in Russia and Ukraine escalates, it may lead to disruptions in the supply of materials. In addition to affecting the U.S. semiconductor industry, this scenario would also slow the growth of the EU chip industry.
However, the Semiconductor Industry Association said in early March that "the semiconductor industry has a wide variety of suppliers of key materials and gases, so we do not see an immediate risk of supply disruptions associated with Russia and Ukraine." ”
At the same time, in response to unexpected challenges, the United States has reminded semiconductor manufacturers to diversify their supply chains. Chip lithography maker ASML has previously said it is already looking for sources of neon gas outside Ukraine.
At present, several chip manufacturers have mentioned that they have enough high-purity neon gas. It is understood that before the start of the Russo-Ukrainian war, major chip manufacturers had hoarded a large amount of neon gas.
Intel, GF and Micron all say they have diverse supply chains and high-purity neon stocks. In addition, they added that while not entirely immune to material shortages, diverse supply chains around the world provide security and are not expected to be disrupted in the near term.
"We have assessed the possible impact of the conflict on Intel's supply chain. Intel has a diverse global supply chain that minimizes the risk of potential supply disruptions. At the same time, we are also carefully monitoring the further development of the incident. Intel said.
GF told the media: "We will continue to monitor the situation very carefully and maintain day-to-day contact with our suppliers. ”
Semiconductor companies in Taiwan, such as TSMC, UMC, Winbond Electronics, etc., also said that they have a "safety stock" of high-purity neon gas and are fully prepared, so there will be no supply chain problems in the short term.
Figure | Semiconductor Manufacturing Control Process (Source: TSMC)
Two memory chip manufacturers, Samsung Electronics and SK Hynix, have factories in China, so the gas produced by the chip is easily available, and the Russo-Ukrainian War had little impact on its chip sales in the short term.
Japanese chipmakers Renesas Electronics and Rohm Semiconductor say they can find raw material supplies from other markets such as China.
The impact of the war on each chipmaker depends on how well prepared they are for raw material purchases and whether they have established alternative sources of supply.
Larger chipmakers may have more inventory to prop up them for two months or more. However, many other chipmakers do not have this extra inventory as a buffer, especially some smaller companies, which may be hit harder.
(Source: TSMC)
Although for now, chipmakers in the semiconductor industry have a relatively large amount of neon gas inventory on hand, so they have not shown obvious concerns. But the situation is dynamic, and if the conflict continues, their production will inevitably eventually be affected. Its inventory, depleted in recent months, could make it difficult to manufacture sufficient products for customers and create broader supply chain constraints.
In addition, even if the war stops, the semiconductor raw material companies concerned are not sure whether they will be able to obtain the appropriate raw materials to produce and purify neon gas. Moreover, it is understood that even if alternative sources can be obtained, it will take about half a year to obtain product certification. If you want to build a new production line, it will take at least 9 months, or even two years, to have a certain amount of neon gas production. If the supply shortage is considered temporary, there may not be a company willing to invest in the factory.
In addition, with the shutdown of Cryoin and Ingas, which account for a large proportion of the world's high-purity and ultra-high-purity neon supply, the price of semiconductor-grade neon gas will inevitably rise, and their competitors may need to continue to increase production to meet growing demand.
Larissa Bondarenko, Cryoin's director of business development, said, "With the plant closed, the company can withstand at least three months, but if the equipment is damaged, it will cause a greater drag on the company's financial situation and make it more difficult to restart operations quickly." ”
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reference:
https://www.reuters.com/technology/exclusive-ukraine-halts-half-worlds-neon-output-chips-clouding-outlook-2022-03-11/
https://www.tomshardware.com/news/ukraine-neon-gas-production
https://www.theregister.com/2022/03/11/ukraine_neon_supplies/
https://www.euractiv.com/section/digital/news/ukraine-war-could-further-upset-the-production-of-semi-conductors/
https://www.ft.com/content/ac8733c4-bfea-4499-8a48-4997a77ad33f