How will the war between Russia and Ukraine Affect Semiconductor Companies?

The conflict between Ukraine and Russia may exacerbate supply problems at a time when the global core shortage problem remains unresolved.

At present, Ukraine is a major supplier of rare gases such as neon gas in the world, and Ukraine accounts for 70% of global neon production; while Russia is a major exporter of palladium, nickel, aluminum and other metal materials, and Russia accounts for 45% of global palladium production.

Noble gases such as neon and krypton are necessary materials in semiconductor lithography, and palladium can be used in some packaging processes.

During the previous Ukrainian crisis in 2015, the price of neon gas went out of a big parabola, from the initial 750 yuan per cubic meter that year to the historical peak of 25,000 yuan in mid-July, and neon gas became the most popular in the world in 2015. gas, causing a supply chain crisis.

According to a report released by TrendForce, a market research firm, the conflict between Ukraine and Russia may affect the supply of inert gas in Ukraine. Although it will not completely stop chip production in the short term, the reduction in neon gas supply may lead to a rise in neon gas prices. , which may increase wafer production costs and affect global semiconductor production capacity.

In response to the shortage of materials such as rare gases and palladium that may be caused by the conflict between Russia and Ukraine, the major chip giants responded to the estimated impact.

Dutch lithography giant ASML appears to be feeling the crisis and is looking for alternative sources in case the conflict between Russia and Ukraine causes supply disruptions. Although Ukraine is the world's largest neon producer, less than 20 percent of the neon gas used by ASML comes from the country, an ASML spokesman said on Wednesday.

Micron, a major American semiconductor manufacturer, recently revealed that some of the noble gases they use, such as neon, come from the local area, claiming that they will pay close attention to the situation in Ukraine and Russia, and hope that the situation can be eased. The company emphasized that it has large inventories of noble gases and has many supply chains that will not be hit hard by the local situation.

UMC, a large wafer foundry in Taiwan, said recently that although it uses neon gas from Ukraine, UMC has always maintained a multi-source supplier, not just a single source of supply. Even if Ukraine is out of stock, UMC can still be in Taiwan. Find alternative sources of supply.

A spokesman for Intel, a US chip supplier, also said previously that the supply of neon gas has not affected the company's business for the time being.

GLOBALFOUNDRIES said it does not anticipate any immediate risk and has the flexibility to source supplies outside Russia or Ukraine.

SK Hynix President and CEO Lee Seok-hee mentioned during the previous "Semiconductor Investment Promotion Conference" in South Korea that SK Hynix has made preparations in advance and has sufficient material reserves, and Ukraine-related risks have no impact on the business.

ASE said supplies of materials "currently" remain stable.

TSMC declined to comment "at this moment."

According to industry analysts, small and medium-sized enterprises in the supply chain will be the first to be injured in this round of crisis, while larger semiconductor companies like Micron have more sources of supply and can be more resilient in the face of the Ukraine-Russia crisis. It may not be affected in the short term, but not necessarily in the long run.

Ren Lu, a senior analyst in China's special gas market, said that in extreme cases, if the Russian-Ukrainian supply chain is interrupted, China can organize emergency production to ensure domestic supply. Among the tensions between Russia and Ukraine, the most tense countries should be Japan, South Korea, the United States and other countries.

Most of Japan needs to rely on imports from Ukraine and other countries, and its domestic production of rare gases is very small. In addition, Japanese media reported that if Russia attacks Ukraine, the Japanese government will consider following up with the United States in exporting Russian chips and high-tech products using advanced technologies such as AI and robots.

In the past, South Korea imported all neon gas and relied on foreign technology. It has just achieved nationalized production in early 2022, but the production capacity still needs a process of climbing. Therefore, South Korea has considerable concerns about the possibility of reducing the supply of neon gas due to the situation in Russia and Ukraine.

In the United States, almost all the neon gas suppliers use come from Ukraine and Russia. More than 90 percent of semiconductor-grade neon gas in the U.S. comes from Ukraine, and 35 percent of palladium comes from Russia, Techcet estimates. With Russian President Vladimir Putin announcing a special military operation in the Donbass region, President Biden announced that he will work with allies to impose tougher sanctions on Russia. However, rare gases and other semiconductor materials are likely to become Russia's threat to the United States. countermeasures.

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