About 45% to 54% of global production of neon for semiconductors, essential for lasers used to make chips, comes from two Ukrainian companies, Ingas and Cryoin, according to Reuters calculations based on data from the companies and from the Techcet research firm.
Global consumption of neon for chip production reached around 540 tons in 2021, according to Techcet.
Ingas and Cryoin told Reuters they have ceased operations as Russian troops continue bombing Ukrainian cities.
This interruption in production darkens the outlook for the chip sector, already in a state of shortage since the COVID-19 pandemic.
Though estimates vary widely on how much neon supplies semiconductor makers have, production could take a further hit if the dispute drags on, said CFRA analyst Angelo Zino.
“If inventory runs out by April and chipmakers haven’t placed orders in other regions, that likely means additional supply chain strain and the inability to manufacture the final product. for many customers,” he said.
Before the Russian invasion of Ukraine, Ingas produced 15,000 to 20,000 cubic meters of neon per month for customers based in Taiwan, Korea, China, the United States and Germany, of which around 75% was for the lighting industry alone. chips, Nikolaï Avdjy, commercial director of the group, located in Mariupol, told Reuters.
The company Cryoin, which produced from Odessa around 10,000 to 15,000 cubic meters of neon per month, suspended its operations on February 24 – the date of the launch of the Russian offensive – in order to ensure the safety of personnel, said the director of the Business Development.
Neon, also used in laser eye surgery, is also produced in China where prices keep rising.
According to the Chinese press, quoting a site specializing in the raw materials market, the price of Chinese neon has quadrupled in four months, to more than 1,600 yuan per cubic meter at the end of February.
Companies in other countries could start producing the gas, but the ramp-up would take nine months to two years, said Richard Barnett, marketing director at Supplyframe, a supplier of information to companies in the electronics sector.
(Report Alexandra Alper; with Brenda Goh; French version Laetitia Volga, edited by Sophie Louet)
by Alexandra Alper