Image source: Christian Ibarra / Pixabay
Ukrainian companies Ingas and Cryoin, which produce about half of the world's supply of semiconductor grade neon, have suspended production amid heightened attacks by Russian forces.
According to Reuters, these two companies produce between 45% and 54% of the world's high grade neon that is used for the lasers that etch patterns into semiconductor chips.
US companies are even more dependent, with as much as a 90% reliance on Ukrainian neon.
The production halt puts even more pressure on the global supply of semiconductors, already under severe constraints from the COVID-19 pandemic.
Apple, one of the world’s largest chip buyers, told manufacturers in October that it would make 10 million fewer iPhones in 2021 than planned due to chip shortages, according to Bloomberg.
Last month, the White House warned US chipmakers to find alternative suppliers of semiconductor materials.
"If stockpiles are depleted by April and chipmakers don't have orders locked up in other regions of the world, it likely means further constraints for the broader supply chain and inability to manufacture the end-product for many key customers," said Angelo Zino, an analyst at CFRA.
Ingas, based in Mariupol, a city under severe attack, produced between 15,000 to 20,000 cubic meters of neon per month, while Cryoin, based in Odessa, produced 10,000 to 15,000 cubic meters of neon per month.
Prices for semiconductor grade neon have soared by 500% in just the past three months, similar to a run-up during Russia's annexation of Crimea in 2014.
Richard Barnett, chief marketing officer of Supplyframe, a provider of market intelligence to global electronics companies, says that it would take nine months to two years for other companies to initiate and ramp up neon production.
Ukraine’s neon industry is driven by Russian steel manufacturing, as neon is a a byproduct of the manufacturing process.
Sources: Equities News