The price of Russia’s war on Ukraine seems to be heavy not only for itself but also for the whole world. Because two Ukrainian companies, which undertake half of the world’s semiconductor-grade neon production, announced that they are suspending all their work.
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With the onset of the COVID-19 pandemic, disruptions in the supply chain, raw material production shortages and the accompanying chip crisis have taken over the entire global technology market. In the past, many companies such as Intel, AMD, Apple, VW group and Tesla predicted that these problems would be overcome by 2023.
But the price of the war that Russia started unilaterally against Ukraine was heavy. Of course, Russia was the most affected by all the big technology companies and the sanctions and embargoes imposed by the USA and European states.
But the two Ukrainian companies, which are responsible for half of the world’s semiconductor-grade neon production, could not stand it any longer and said it had suspended all work. But if the war continues, they may have to literally shut their doors down.
It is estimated that these two companies produce between 45 percent and 54 percent of the specific type of neon needed to produce semiconductor chips. Under normal circumstances, Ingas alone handles 15,000 to 20,000 cubic meters of neon per month and transfers 75% of it directly to the chip production line.
Of course, considering that global neon production can reach 540 metric tons per year, this means a very serious loss. Another Ukrainian company that produces semiconductor grade neon, Cryoin, stopped all operations on the day the invasion began. But Ingas continued production in the hope that the war would end. However, due to the advance of the Russians, he had to stop the whole operation.
Techcet President Lita Shon-Roy said that this neon shortage caused by Russia could disproportionately affect small chip manufacturers in the short term and even cause them to go bankrupt. In his statement, She included the following:
The biggest chipmakers like Intel, Samsung and TSMC have more purchasing power (vs smaller companies) and access to inventories that can cover them for two months or more.
With Russia’s invasion of Crimea in 2014, neon prices rose 600 percent. This situation, along with the chip crisis, caused the prices of all technological devices from smartphones to cars to increase. But still production continued.
Therefore, even if the war ends today, it may take a few months for these companies to reactivate and activate their production and distribution networks. While this is the case, before the summer months, a great increase in the price of technological devices and stock problems may begin to occur.
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