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Escalating problems between Russia and the Ukraine may affect the supply of Neon gas and Palladium…
Electronics industry commentators have suggested that the supply problems severely affecting our market will begin to ease during the latter part of 2022. Unfortunately, it has been highlighted that the escalating problems between Russia and the Ukraine may affect the supply of Neon gas and Palladium, which could have a further effect on the semiconductor supply chain.
Around 40-50% of semi-conductor-grade neon comes from Russia and the Ukraine. Neon is a highly purified gas that is used for etching circuit designs into silicon wafers. Palladium, of which 45% of the global supply comes from Russia, is used for multi-layer ceramic (chip) capacitors (MLCC).
Currently manufacturers are saying the situation in Ukraine will have no immediate supply disruption risks, however, as the semiconductor supply chain is still recovering from the effects of the pandemic, the war in Ukraine could add further stress to the system.
Supply chain contingency plans
Many chip manufacturers have secured volume of these materials to ensure the impact is minimal, however, the risk of contingency stockpiles running low, the longer the conflict continues, could lead to increased lead times and unstable prices. It is important to consider that these materials can be sourced from different countries, and should the issue escalate further, other alterative sourcing options will be looked at. We will continue to monitor the long-term impact over the coming months, and keep you informed as and when we receive any information.