 The semiconductor shortage, which was expected to ease by mid-2022, is likely to get worse.Â
Both Russia and Ukraine are the key suppliers of components or raw materials that go into making semiconductors manufacturing.
The invasion of Russia on Ukraine will further stress the industry globally and fears are that it can result in manufacturing constraints leading to supply shortages and semiconductor price hikes.
Just like Taiwan, both Ukraine and Russia also play a pivotal role in the global semiconductor supply chains. Ukraine produces a major 70 per cent of the global supply of neon and Russia also controls approximate 44 per cent of global palladium supplies.
In the production of semiconductor chips, neon and palladium are the key resources. And these chips are almost necessary for all other industries like mobile phones, automobiles, consumer electronics and many others.
Apple is a major producer of mobile phones and laptops, but the number of iPhone models being manufactured would be reduced due to the chip shortage.
Semiconductors that power every electronic product whether it is used on earth or also in space, has a complex ecosystem of chip manufacturing, which is a difficult and complex process.
The international semiconductor industry is interdependent, and no country in the world has managed to master the ecosystem as yet.
The pivotal role of Russia and Ukraine in the global semiconductor supply
Russia is one of the chief producers of palladium, which is very essential for memory and sensor chips. Russia also produces several other key raw materials for computer chips, including the rare–earth metal, scandium.
on the contrary, Ukraine is also the leading exporter of neon gas. It is a highly purified gas that is used for the most significant process – etching circuit designs into silicon wafers to create chips.
According to Moody’s Analytics, In terms of regions, the most salient unpleasant impact will be felt in European countries that are recipients of Russian natural gas and oil.
Russia, as per their estimates, has 17 per cent of its natural gas and holds 12 per cent of the world’s oil supply. It is also the main supplier of palladium and wheat, and along with
Significantly, it’s reported that around 75 per cent of the worldwide neon supply is consumed by semiconductor manufacturing efforts. Ukraine has most of the world’s neon supply.
But still, the sum of Ukraine’s output wouldn’t be enough to cover the industry’s demand, but it does impart a considerable portion of the neon supply
The world still reeling from a global chip shortage, earlier due to pandemics and recently Russia and Ukraine crises.
The invasion of Ukraine by Russia might have some inference on the global chip supply. According to a Financial Times report, the cost for rare gases critical to the semiconductor manufacturing process such as xenon, neon, and krypton are going through the roof, and available stocks and supplies are already proving insufficient for current demand levels.
Edited By- Subbuthai Padma
Published By- Satheesh Kumar
