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Shortages Helped Chipmakers Stockpile For Ukraine War

The last two years of chip shortages, caused by everything from plant fires and droughts, to pandemics and shipping bottlenecks, have crippled the semiconductor industry.

So when President Biden threatened trade bans with Russia in early February, and war in Ukraine looked more and more likely, the chipmakers were prepared.

Between 25-50 per cent of the world’s semiconductor-grade neon comes from Russia and Ukraine, while around 33 per cent of palladium comes from Russia.

Given the continuous upheaval since the pandemic hit, the world’s largest chipmakers have been stockpiling materials, and have built up reserves that can last for up to three months.

There is enough neon in the supply chain currently to last the entire industry another six months.

“Had this happened maybe 10 years ago, we might have been in a lot more pain than we are today,” Jimmy Goodrich, vice president for global policy at US industry body Semiconductor Industry Association, told the Wall Street Journal.

The world’s largest contract chipmaker TSMC says it doesn’t expect supply problems stemming from the war, while German chipmaker Infineon, who supply automotive manufacturers said it has “increased its inventories of potentially affected raw materials and noble gases.”

Of course, if the war rages on, prices are expected to skyrocket.

But, as the WSJ notes, neon makes up only a fraction of the semiconductor industry’s total costs.



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