When Russia annexed Crimea in 2014, the world’s chipmakers became even more dependent on Ukraine because the country supplies about 70% of neon gas. “There have been delays in shipments because of cross-border issues, and the raw materials needed to produce neon lights are also in short supply,” said Shon-Roy. “Russia is focusing a lot of its efforts on war, not on steel production.”
Burned by that experience, the chip industry tried to diversify its supply. A company called Cymer, which is owned by Dutch chip giant ASML and produces lasers used to draw patterns on advanced semiconductor chips, has been trying to reduce its neon consumption. “Chip manufacturers are concerned about the recent escalation in neon prices and supply continuity,” said David Knowles, Cymer’s vice president and general manager, said at that timewithout specifically mentioning Ukraine.
Bondarenko said the price spike in 2014 was mainly due to a feud between rival neon makers Cryoin and Iceblick, which are now defunct. However, if access to Russian crude becomes an issue, she said, Cryoin has enough supplies to keep production running until the end of March. If that runs out, she claims there are Ukrainian crude producers that Cryoin can turn to as an alternative.
Instead, she’s more worried about getting neon out of the country. “The borders are overcrowded right now because people, civilians, are trying to evacuate,” she said. “If the authorities of the countries where our customers are located could impact the border situation for commercial shipments it would be a big help. [and] It will not affect the entire industry worldwide. ”
Chipmakers have been downplaying how much they will be affected by the crisis in Ukraine. “No need to worry,” said Lee Seok-hee, CEO of Korean chipmaker SK Hynix, said last week, adds the company has “secured a lot” of the material. Koichi Hagiuda, Minister of Economy, Trade and Industry of Japan, speak Japanese chipmakers do not expect a “major impact” on their operations as they can source materials elsewhere. The country imports 5% of the gas used in semiconductor production from Ukraine.
But there are signs that despite 2014’s warnings, neon Ukraine is still playing a major role in the industry. ASML told WIRED that the source “less than 20%” of the neon lights they use in the factories are from Russia or Ukraine. “Along with our supplier, we are investigating alternative sources in the event of supply disruptions from Ukraine and Russia,” the spokesperson said.
There are concerns that the US is even more vulnerable. Last week, the White House urged US chipmakers to find alternative suppliers, Reuters report. “We see a large amount of imports coming into the US from [Russia and Ukraine],” said Shon-Roy of TechCet. “It is my educated assessment that what comes from Russia and Ukraine into the United States can amount to 80 to 90 percent of the total. [neon] imported goods. US chip maker Intel did not respond to a request for comment.
But sourcing neon from elsewhere will not be easy. Any disruption in Ukraine will affect chipmakers at a time when the industry is under heavy pressure from post-pandemic demand. “The drive to increase output is so strong that it is causing tension in supply chains everywhere, even without war,” added Shon-Roy. “So there’s no excess supply of gas that I know of, not in the Western world.”
Stories with WIRED are better