The invasion of Ukraine would paralyze half of the world’s neon production

The invasion to Ukraine it would have consequences that we did not expect: it would paralyze half of the world’s Neon production. As the world continues to grapple with semiconductor shortages, Russia’s invasion of Ukraine threatens to put another major chip component in a bind. The length of the war will determine the severity of the disruption.

About half of the world’s supply of neon -necessary for lasers used in chip manufacturing- comes from two Ukrainian companies. Reuters reports that both have ceased production since the beginning of the Russian invasion. A market study of Techcet he notes that the United States gets just under 50% of its supply from the region.

One of the companies that manufactures neon, Ingasis headquartered in Mariupol, which is currently under attack by Russian forces. Mariupol is the same city where a Russian airstrike hit a maternity hospital a few days ago. The other company, called Cryoinstopped production the day the invasion began, although its headquarters city, Odessa, has not yet been attacked.

Chipmakers try to put cold cloths on the matter

Shortly after the invasion, chipmakers tried to downplay fears of further supply disruption. While acknowledging Ukraine’s importance in neon production, they also noted that manufacturers often keep stockpiles for emergencies. It is difficult to say how much neon the various companies and their customers have in stock, but the cessation of production could cause serious problems in a few months. That is, the consequences will be seen in the long term.

Cryoin he thinks he can last three months with production stopped, but he may have more problems if his facilities are damaged, and he may have trouble getting the raw materials needed to purify the neon. The central bank and the Ministry of Economy of Taiwanwhere it is based TSMCThey say that companies in that country have neon reserves.

Although companies from other countries could supply neon, the invasion could increase prices. Other companies not yet producing neon could take months to years to get up and running, and it’s not yet clear how long the war or semiconductor shortage will last. A TSMC R&D executive recently said the chip shortage could last until 2024.

Hopefully he’s wrong and this will be fixed soon. For now, we can only speculate on what will happen and keep an eye on how the lack of neon progresses and its consequences in the short and long term.

And you, how do you think neon production will affect the hardware market? Will we see a price increase or more shortages? Or both?

Source: Techspot