The industry has recently expressed concern about the stability of the supply of key raw materials in the semiconductor chip industry.

At present, Russia and Ukraine supply a large amount of neon and palladium, which are used to produce semiconductors such as memory chips. The article of Japan economic news said that the situation in Ukraine may affect semiconductor production, which is regarded as “rice of industry”. The two countries account for a small proportion of global chip semiconductor production, but the proportion of raw materials is very large.

The Philadelphia Semiconductor Index (SOx) fell 1.3% on February 28, reflecting rising concerns about the stability of global chip industry supply in the future.

According to the report released by market research agency techcet in February, the global supply share of neon (NE) in Ukraine reached 70%, while the global supply share of krypton (KR) and xenon (Xe) reached 40% and 30% respectively. These rare gases can be used in the production of excimer laser light sources and semiconductor etching in ARF and KrF lithography machines, mainly for the 250-130nm mature process of 8-inch wafers. Techcet said neon is a by-product of steel production in Russia and purified in Ukraine. In the view of the industry, the supply of relevant rare gases may be more tight.

More than 90% of neon used in the U.S. semiconductor industry is provided by Ukraine. This gas is very important for lasers used in chip manufacturing. In addition, 35% of palladium used in the United States comes from Russia. Palladium is used in products such as sensors and memories.

Jibang consulting believes that the increasingly complex situation in Russia and Ukraine may impact the inert gas supply in the region. Although it will not cause production interruption in the short term, the reduction of gas supply may still cause price rise and semiconductor production cost may rise. The rise of wafer manufacturing costs in Russia or Ukraine may have an impact on the formation of the wafer chain.

In addition, Russian palladium is also an important raw material for semiconductors. It is mainly used in packaging and in the manufacture of sensors and memories. Russia accounts for about 40% of the global palladium supply.

The United States and Japan recently announced sanctions against Russia to restrict the export of chip technology products to Russia. In this case, the industry is worried that Russia is likely to cut off the supply of raw materials when taking countermeasures, exacerbating global and regional chip tensions.

Many Russian chip manufacturers are optimistic about the short-term impact of the conflict in Ukraine. In 2014, after the conflict between Russia and Ukraine in Crimea triggered a sharp rise in neon prices, some companies began to seek supply sources outside Ukraine and Russia.