Russia's Invasion to Worsen the World's Chip Shortage

One of the consequences of Russia’s assault on Ukraine is placing even more pressure on an already-strained global computer chip supply.  

As such, the military assault pushed Ukraine’s two leading neon suppliers, Ingas and Cryoin, to suspend operations, which will lead to a considerable disorder in global economic outcomes.  

Neon is crucial to semiconductor chip manufacturing, and around half of the world’s semiconductor-grade neon develops from these two suppliers, Ingas and Cryoin.  

The reports note that the two corporations deliver between 45 percent and 54 percent of the precise type of neon needed to manufacture semiconductor chips.  

Under normal circumstances, Ingas produces 15,000 to 20,000 cubic meters of neon per month, with 75 percent of that going straight into the chip industry.   

According to the market research firm, TechcetGlobal neon, production reaches 540 metric tons per year. While Cryoin ceased operations on the day of the attack, Ingas maintained production as Russian forces entered; however, it eventually stopped operations this week due to the escalating conflict.   

According to the World Health Organization (WHO), the conflict hit near Inga’s location last Wednesday, when Russia’s military bombarded a maternity hospital in Mariupol.  

In parallel, those disturbances pose an ominous threat to an industry that started its course to recover from two years of pandemic-related supply chain shortages. Surprises from those needs were directed to production holds for everything from Ford F-150s to Apple electronics and just about everything in between.  

” The biggest chip fabricators, like Samsung, Intel, and TSMC, have tremendous buying power and access to products that may cover them for longer periods, two months or more,” Shon-Roy said.  

Access to semiconductors already played an essential part in the war in Ukraine as the international community tries to punish and avert Russia. Days after Vladimir Putin’s initial assault, U.S. President Joe Biden’s administration issued new sanctions, including the sale of U.S.-made semiconductors and other technologies to the country, aimed at limiting Russia’s military access to necessary tech. Taiwan, Japan, and South Korea followed up with similar conditions. 

It is worth mentioning that the U.S. and other countries worldwide responded to the lack with endeavors to ramp up at-home chip production, but most of those efforts will take years to handle any significant fruit. 

Even if those new chip installations maintain individual nations’ autonomy, deficiencies of essential components like neon will still derail supply chains. Also, you can see the consequences of a global neon shortage, while Neon prices witnessed a 600 percent price increase during Russia’s last conflict with Ukraine in 2014.  

Meanwhile, the Financial Times reported that xenon, neon, and krypton supply is getting closer as chipmakers and trading houses flow to make more orders because the gases are bound to be in short supply as the war rages on.  

Last November, Japan announced it had committed $5.2 billion toward providing support for semiconductor manufacturers in a bid to help solve the world’s ongoing chip shortage.