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A Prolonged War in Ukraine could affect the supply of a critical gas known as 'Neon' that's used in the production of chips made by TSMC+

1 x cover Neon gas

Neon: A colorless gas exhibiting an orange-red glow when placed in an electric field

(Click on image to Greatly Enlarge)

 

The current global chip shortage is an ongoing global crisis in which the demand for integrated circuits (commonly known as semiconductor chips) exceeds the supply, affecting more than 169 industries. The crisis has led to major price increases, shortages and queues amongst consumers for computer devices, automobiles, graphics cards and more. Apple's CEO has made several references during financial conference calls about chip shortages translating to slightly lower shipments. While some have hinted that industry is close to turning the corner on this issue, new bad news has surfaced.

 

It's being reported on by CNBC today that "Russia’s war in Ukraine could see the production of neon, a critical gas in advanced semiconductor manufacturing, fall to worryingly low levels at a time when the world is already grappling with a chip shortage.

 

Neon is required for the lasers that are used in a chip production process known as lithography, where machines carve patterns onto tiny pieces of silicon made by the likes of Samsung, Intel and TSMC, a major supplier of Apple chips.

 

More than half of the world’s neon is produced by a handful of companies in Ukraine, according to Peter Hanbury, a semiconductor analyst at research firm Bain & Co.

 

Based on estimates from consultancy firm Techcet, worldwide neon consumption for semiconductor production reached roughly 540 metric tons last year. Given Ukraine produces over half of the world’s neon, the figure could fall below 270 metric tons in 2022 if the nation’s neon producers remain shut."

 

Peter Hanbury told CNBC in an email that "Of the materials used in chip-making that could see a hit to their supply from the Ukraine conflict, it is neon that poses the greatest potential challenge."

 

The ongoing global chip shortage has already wreaked havoc on supply chains and led to lengthy delays on products such as new cars and games consoles like the PlayStation 5. A potential global neon shortage now threatens to make matters even worse.

 

Dutch firm ASML, which makes the highly complex lithography machines used by the chip giants, reduced its reliance on neon sourced from Ukraine to approximately 20% of previous levels, Hanbury added.

 

A spokesperson for ASML told CNBC: "ASML recognizes the importance of being prepared in order to manage unplanned events including conflicts when they could impact our supply chain."

 

They added: "We continue to closely monitor the status of the conflict and are currently investigating together with our suppliers what the impact (if any) would be and to what extent our suppliers can use alternative sources if necessary." There's much more to this story that you can read over at CNBC.

 

One of the major Neon gas suppliers is Ingas is located in Mariupol, a city that has been leveled by Russian Air strikes as seen in this video report. Two other key suppliers Cryoin and Iceblic are located in Odessa, a key Russian target that could be next.

 

Will TSMC be able to work around this issue or could effect TSMC's future chip production? While it's too early to forecast at this time, there's no doubt that the delivery of Neon to chip plants will suffer until the war in Ukraine is over and production facilities are able to get back on track.

 

10.0F3 - Patently Extra News

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