Chip industry assesses Russia, Ukraine risk

Chip industry assesses Russia, Ukraine risk

Chipmakers insisted a crisis involving Russia and Ukraine would have a limited impact to supplies in the short-term, but noted the conflict could cause higher prices and further issues if tougher sanctions are put in place, Reuters reported.

The nations are considered key players in global chip production. A range of chipmakers and sources told Reuters about the situation after Russia began a military operation in eastern Ukraine, which proved a precursor to a full invasion.

Figures from research company Techcet show Ukraine supplies more than 90 per cent of US semiconductor-grade neon which is critical for lasers used in chipmaking. The company also noted 33 per cent of US palladium, used in sensors, memory and other chips, comes from Russia.

Despite the crisis being potentially one of the most severe to hit Europe in several decades, Reuters reported chip companies are well prepared due to stockpiling in response to the Covid-19 (coronavirus) pandemic.

The US government also recently told the chip industry to diversify supply chains away from Russia, should the country retaliate against sanctions by imposing export curbs to key materials.

Chip companies including SK Hynix, Intel, Global Foundries, ASE Technology and Unisem told Reuters they did not see any immediate cause for concern, though an unnamed Japanese chip industry source warned any future problems around neon and palladium supplies could ultimately lead to higher chip prices.

And a represenative of Japanese electronics company Ibiden noted some concerns, while adding it had sufficient stocks for the time being.

Samsung, Intel and ASML Holding, which supply chipmakers including Taiwan Semiconductor Corp, added they were now examining alternatives to neon.