Ukraine Conflict May Increase Chip Shortage

March 1, 2022

Ukraine supplies half of the world's neon gas, a critical component of semiconductor chips.

Mar. 1, 2022—As the Russo-Ukrainian military conflict spirals towards its first full week, one company along the Black Sea, Cryoin, finds itself front and center of world economic news for what it supplies—semiconductors.

Neon gas, which Cryoin makes, powers lasers that etch patterns into computer chips. Analysts warn that the conflict between Russia and Ukraine could affect supply chains in Europe, Japan, Korea, China, Taiwan, and in the US, who sources most of its neon from Cryoin.

The company halted its production following Thursday’s Russian invasion.

“We decided that [our employees] should stay at home for the next couple of days until the situation is clearer, to make sure that everyone is safe,” business development director Larissa Bondarenko told Wired, adding that efforts to restart are too dangerous at the time. 

Semiconductors are responsible for powering many consumer smart electronics, like laptops and phones, and are the electrical component behind modern cars. This new conflict, along with the pandemic, adds another strike in chip shortages facing the auto industry. In 2021 a lack of semiconductors affected production for nearly all major automakers. The same lack of supply is fueling the pricing surge of new and used vehicles across the country. 

While neon prices have remained unchanged, last time neon prices were affected was during the 2014 annexation of Crimea, when Russia seized the peninsula from Ukraine. Costs for the gas increased by 600 percent. 

And while the White House has asked US chipmakers to find alternative suppliers, sourcing neon outside of Ukraine will be difficult since an estimated 80 to 90 percent of all [neon] imports come from the region.

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Ratchet+Wrench Staff Reporters

The Ratchet+Wrench staff reporters have a combined two-plus decades of journalism and mechanical repair experience.

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