Major chip makers are still predicting a limited supply chain disruption due to the Russia-Ukraine crisis thanks to raw material stockpiling and purchasing diversification, but some industry sources are worried about the long-term impact.
One of Europe’s worst security crises in decades is unfolding, with Russian President Vladimir Putin on Thursday authorizing a military operation in eastern Ukraine that appeared to be the start of a war.
The crisis has hit stocks in technology companies that ship or sell globally for fear of further disruption due to a year-long shortage of semiconductor chips.
Ukraine supplies more than 90 percent of US semiconductor-grade neon, which is critical for lasers used in chip manufacturing. The gas, a by-product of the Russian steel industry, is being refined in Ukraine, according to research firm Techcet. Thirty-five percent of US palladium, used in sensors and memory, among other things, comes from Russia.
“Chip makers are not directly impacted, but companies that supply them with semiconductor materials are buying gases, including neon and palladium, from Russia and Ukraine,” said a Japanese chip industry source who asked not to be named. “The availability of these materials is already limited, so any further pressure on supplies could push prices up. This, in turn, could drive up chip prices.”
But companies are better prepared than in recent years thanks to other disruptions and conflicts that have lessened some of the pain.
The White House has warned chipmakers to diversify its supply chain if Russia responds to the threat of US export restrictions by blocking access to key materials, Reuters reported this month, citing people familiar with the matter.
On the eve of the invasion, the West imposed sanctions on the Russian Nord Stream 2 gas pipeline and some Russian banks, and imposed restrictions on a number of high-ranking Russian officials. Additional sanctions could come in the form of Cold War-like technology restrictions, followed by Russian export retaliation.
ASML Holding, a key Dutch supplier to chip makers including TSMC, Samsung Electronics and Intel, said Wednesday it is exploring alternative sources of neon.
Most chipmakers are on standby and in touch before Thursday’s escalation projected confidence in their supply chains, which they have diversified in the wake of the US-China trade standoff, the pandemic and Japan’s diplomatic spat with Seoul.
Some companies have begun to diversify outside of Russia and Ukraine after Moscow annexed Crimea in 2014, causing neon prices to skyrocket.
Lee Suk-hee, CEO of South Korean memory chip maker SK Hynix, told reporters last week that the company has “stocked a lot” of chip materials and that there is “nothing to worry about.”
Intel said it does not expect any impact. GlobalFoundries said it does not expect direct risk and has the ability to source outside of Russia or Ukraine, as Taiwanese chipmaker United Microelectronics Corp did.
TSMC, the world’s largest contract chipmaker, declined to comment “for now.”
Taiwanese chip testing and packaging company ASE Technology said its supply of materials “for now” remains stable.
Taiwan’s economy ministry told Reuters in a statement that it had reviewed Taiwan’s semiconductor supply chain and found no direct impact on materials or manufacturing activities.
“Right now, Russia is not one of the main markets for the Taiwanese foundry industry,” said Joan Chiao, senior analyst at market research firm TrendForce.
Malaysian chip maker Unisem, whose customers include Apple, said it does not expect any impact on chip production in terms of raw materials, since the materials it needs are not sourced from Russia, but its machines are mainly from the US, Japan, Korea, Singapore and other countries. locally.
Malaysia has become an important link in the chip manufacturing chain, accounting for 13 percent of global chip assembly and packaging testing.
© Thomson Reuters 2022