Chip world's major suppliers of neon gas shut down by Ukraine invasion – report
Neon Genesis: Even Cryoin gone
Analysts warned Russia's invasion of Ukraine could derail the supply chains of semiconductor fabs. Now those concerns are playing out with the apparent shuttering of two major neon gas suppliers in Ukraine.
For a report today Reuters calculated that the two neon suppliers, Ingas and Cryoin, produce 45 to 54 percent of the world's neon for chip fabrication, based on information provided by the companies and electronics materials research firm Techcet.
The Ukrainian duo told the news agency they have shuttered in the face of continued attacks on cities in Ukraine by Russian military. Ingas is based in Mariupol, which is being hit hard by Russian troops, while Cryoin is in Odessa, which is also under threat. Their highly pure inert neon gas is needed as a buffer for lasers used during the chip fabrication process.
The shutdowns could exacerbate processor and IC shortages and raise prices of products, as industry watchers have warned, though there may be minimal risk to the major chipmakers, including Intel and TSMC, for now. That's because the big players, at least, are likely to have stocked up on the gas or sought other providers of neon as soon as Russia's occupation of Ukraine loomed.
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"Intel has assessed the possible impact of the conflict on Intel's supply chain. Intel's strategy of having a diverse, global supply chain minimizes its risk to potential local interruptions," an Intel spokeswoman told The Reg. "However, we are monitoring the situation carefully."
The Economy Ministry of Taiwan, where chip foundry TSMC is located, told Reuters semiconductor factories in the country do not expect any supply chain issues in the near-term as they have already prepared for the possibility of neon shortages with "safety stocks" on hand. Chipmakers Samsung and GlobalFoundries did not immediately respond to a request for comment.
Techcet President Lita Shon-Roy told the news agency that while large chipmakers may have enough supply for two or more months, smaller outfits may not be as lucky. "This will compound the issue of supply availability," she said.
While moving neon production outside of Ukraine could be a solution, it could take anywhere from nine months to two years for these manufacturing lines to open up, Richard Barnett of market intelligence firm Supplyframe told Reuters.
The Semiconductor Industry Association, which represents chip companies around the world, told us in early March, a few days after Russia's invasion of Ukraine began, that it didn't expect near-term disruptions. "The semiconductor industry has a diverse set of suppliers of key materials and gases, so we do not believe there are immediate supply disruption risks related to Russia and Ukraine," a SIA rep said.
SIA declined to provide further comment today. ®
Updated to add
A spokesperson for GlobalFoundries has told us: "We continue to monitor the situation very carefully and are in daily contact with our suppliers.
"Our global footprint, with fabs on three continents, helps us to diversify our supply chain and gives us flexibility to cross-qualify our fabs as well as leverage alternative sources outside of Russia or the Ukraine for key supplies. We are not totally immune to global shortages, but our footprint provides us with more insulation."