Chip Production Hit by Ukraine Invasion

Russia’s devastating invasion of Ukraine isn’t just creating catastrophic loss of life and widespread destruction within the country; it is also having a knock-on effect on financial markets, grain supply, petrol prices, and various industries where Ukraine and Russia are significant players. One such industry is neon gas, which is used in the manufacture of semiconductors: Two Ukrainian suppliers—accounting for around half of global chip-grade neon gas production—have been forced to shut down operations. This could lead to a shortage of semiconductors and drive up prices.

Data shows that Ingas and Cryoin, Ukraine’s two major neon gas suppliers, provide between 45% and 54% of the world’s semiconductor-grade neon gas. Both companies have had to cease operations due to the destruction of critical infrastructure by invading Russian forces. Before the war began on February 24th, Ingas was producing 530,000 to 700,000 cubic feet of neon gas per month for customers in China, Taiwan, South Korea, Germany, and the US. Cryoin was producing around 350,000 to 530,000 cubic feet.

Chip production has already been hit hard by global supply chains disturbed by the coronavirus pandemic, with numerous technology companies, camera makers included, announcing product delays. These latest developments will likely exacerbate the problem, since it may prove difficult for other neon gas suppliers to ramp up production.

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