The shutdown of major global neon gas suppliers further disrupts semiconductor production, or increases pressure on the chip supply chain

  It is understood that due to the current Russian-Ukrainian war, Ukrainian companies Ingas and Cryoin, which supply about 50% of the world’s semiconductor-grade neon gas, have recently shut down production.
  The shutdown of these two neon gas suppliers will undoubtedly cast a shadow over the normal supply of chips.
  Neon gas is very important for the lasers that make chips. Its purity requirements are quite high, and it must be refined to 99.99% purity, which only a few companies in the world can do.
  Industry officials said that in recent years, the increase in chip demand has put the semiconductor supply chain in an extremely tight state, and any material supply disruption will have a negative impact on chip production in the next 6 to 12 months, which may lead to chip shortages. exacerbated and lead to higher prices for materials and products.
  Consultancy Techcet warned in early February that U.S. chipmakers are relying almost entirely on Ukraine and Russia for their neon gas needs. If the situation in Russia and Ukraine escalates, it may lead to interruptions in the supply of materials. In addition to affecting the US semiconductor industry, this situation will also slow the growth of the EU chip industry.
  However, the U.S. Semiconductor Industry Association said in early March that “the semiconductor industry has a wide variety of suppliers of critical materials and gases, so we do not see an immediate risk of supply disruptions associated with Russia and Ukraine.”

  Meanwhile, in response to unexpected challenges, the U.S. has reminded semiconductor manufacturers to diversify their supply chains. Chip lithography machine maker ASML previously said it was 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 Russian-Ukrainian war, major chip manufacturers had stockpiled a large amount of neon gas.
  Intel, GF and Micron all said they have diversified supply chains and stockpiles of high-purity neon gas. In addition, they say that while not completely immune to material shortages, it is secured by a diverse supply chain spread across the world and no disruption is expected in the short term.
  ”We have assessed the possible impact of the conflict on Intel’s supply chain. Intel has a diversified global supply chain that minimizes the risk of potential supply disruptions. At the same time, we are carefully monitoring the further development of the event.” Intel said.

  GF told the media: “We will continue to monitor the situation very carefully and maintain daily contact with our suppliers.”
  Semiconductor companies in Taiwan, such as TSMC, UMC, Winbond, etc., also stated that they have A “safety stock” of high-purity neon gas and well prepared so there won’t be any supply chain issues in the short term.
  The two memory chip makers, Samsung Electronics and SK Hynix, have factories in China and thus have easy access to gas for chip production, and the Russian-Ukrainian war will have little impact on their chip sales in the short term.
  Japanese chipmakers Renesas Electronics and Roma Semiconductor Corp said they could find supplies of raw materials from other markets such as China.
  The impact of the war on each chipmaker depends on how well prepared they are to buy raw materials and whether they have established alternative sources of supply.
  Larger chipmakers may have more inventories to support them for two months or more. However, many other chipmakers don’t have this additional inventory as a buffer, especially smaller companies that could be hit harder.

  Although for now, chip makers in the semiconductor industry have a relatively sufficient 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 be affected eventually. If its inventory runs out in recent months, it could struggle to make enough product for customers in the future and cause wider supply chain constraints.
  In addition, even if the war stopped, the relevant semiconductor raw material companies were not sure whether they would be able to obtain the appropriate raw materials to produce and purify neon gas. Moreover, it is understood that even if an alternative source 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 nine months, or even two years, to have a certain amount of neon gas production. If the supply shortage is considered temporary, there may be no companies willing to invest in the construction of factories.
  In addition, with the shutdown of Cryoin and Ingas, which account for a large proportion of the global supply of high-purity and ultra-high-purity neon gas, the price of semiconductor-grade neon gas will inevitably rise, and their competitors may need to continue to increase production to meet the continuous growing demand.
  Larissa Bondarenko, director of business development at Cryoin, said, “With factories closed, the company can withstand at least three months, but if the equipment is damaged, it will be a bigger drag on the company’s finances and allow for a quick restart. It becomes more difficult to operate.”

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