War in Ukraine could increase global chip shortages
We are a long way from global chip shortages. Thanks to the war in Ukraine, the problem can only get worse.
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Many important raw materials come from Ukraine and Russia
Major chip companies fear even greater chip shortages in the future because of the war between Russia and Ukraine. That writes RTL News† Both countries produce a lot of important raw materials that are needed to make chips. Chip manufacturers expect few problems in the short term, but nobody knows how long the war will last. In addition, it is still unknown what the exact consequences of the war will be.
Although the armed conflict between Ukraine and Russia will not immediately cause greater problems in the chip industry, they can certainly develop in the future. Ukraine is an important producer of high-quality neon. Manufacturers use neon in lasers during the chip manufacturing process. Ukraine supplies more than 90 percent of the neon used by US chip manufacturers.
Russia is also an important link in the chip production process. 35 percent of the metal palledium that is processed in American chip factories comes from the war zone. Palladium is needed for memory chips and various sensors. Finally, both Russia and Ukraine are important gas sources.
Are there alternatives to neon and palladium?
ASML, a Dutch manufacturer of chip machines, is looking for alternative sources for ‘the small amount of neon’ it uses. A company spokesperson said: Reuters† However, according to an anonymous insider from the Japanese chip industry, both materials are scarce. So there is a good chance that prices will go up.
Fortunately, chip manufacturers have not been sitting still lately. Many companies have ‘diversified’ their supply of raw materials. Manufacturers are not completely immune to global shortages as a result, but they say they are “affected less by it”. We will therefore have to wait and see to what extent the war in Ukraine has an effect on the chip shortages.
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