Experts fear long-term impact on semiconductor production due to Russia-Ukraine conflict

Amid heightened tensions between Ukraine and Russia, reports suggest that experts are fearing yet another factor that can have a long term impact on the global semiconductor supply chain. In effect, while there may not be any immediate impact, the report suggests that there could be an eventual, long term impact on America’s semiconductor supply. The source of this impact could be supplies of neon, 90% of which comes from Ukraine.

According to American technology consultancy firm Techcet, 90% of semiconductor grade neon, used for semiconductor production for USA, is supplied by Ukraine. This, in itself, could become a factor of contention if the present conflict is not resolved early enough. Neon is deemed to be a key element that is used in the laser etching process used in chipset fabrication, and is therefore a key part of the overall process.

However, according to Venturebeat, the Semiconductor Industry Association (SIA) has stated that given the range of key materials and gases that could be applied in the semiconductor industry, the sudden shortage of supply of neon in chip production should most likely not cause any disruption in the semiconductor manufacturing process in the near future. However, the long term impact of this is as yet unknown.

The Venturebeat report argues for the need to diversify the semiconductor supply chain, including cases of single-point supplies such as Ukraine providing the majority share of semiconductor grade neon. Multiple reports have made a case for the need to democratise semiconductor and electronics manufacturing supply chains, in order to ensure that global disruptions do not take place due to climatic, social or geopolitical incidents.

While it is not yet known if the same would have an impact on India as well, such crises typically have a trickle-down effect across the world. So far, India has felt the impact of the global chip shortage through rising prices of budget smartphones, a lack of availability of laptops and other mainstream gadgets on otherwise robust ecommerce portals, and even increasing waiting times for cars – as automakers failed to get their requisite number of chips.

With the Russia-Ukraine conflict now in sight, it remains to be seen how industries are impacted by the same – and how they react to it as well.