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Russia-Ukraine Conflict Could See Chip Material Prices Spike 600%

Lasers
(Image credit: Shutterstock)

The US government has warned domestic chipmakers that they could face a materials supply crunch, reports Reuters, citing "people familiar with the matter." The warning is based on worries about the potential for conflict between Russia and Ukraine. If Russia does make military advances, there will almost certainly be impacts on industries in Ukraine. Moreover, US sanctions will be implemented on Russia, likely exacerbating supply issues.

Some concerning numbers, highlighting the reliance of the US chipmaking industry on Russia/Ukraine-based materials, are shared by the source. For example, market research group Techcet says that 90% of US semiconductor-grade neon supplies come from Ukraine, while 35% of US palladium is sourced from Russia. In addition, other vital materials like C4F6, Helium, and Scandium also come from the potential flashpoint region.

An unnamed source working in the chipmaking industry told Reuters that supply chains reaching into or near the potential conflict zone are already under review. The person also noted that alternative sources of essential gasses used in chipmaking, including neon, are being reevaluated.

During the Last Military Clash Between Russia and Ukraine, Neon Prices Rose by Nearly 600%

Concerning neon, the source went on to reveal that scarcity "wouldn't stop chipmaking," but would inevitably push prices up. In fact, prices of gasses like Fluorine, also sourced from the problematic region, have already started to increase. 

For the potential scale of resource material price increases facing chipmakers, we only need to turn our clocks back to 2014, when Russia annexed the Crimean peninsula from Ukraine. At that time, neon prices rose nearly 600%. Neon is used in semiconductor fabricating machine lasers.

More concerning development relates to potential rare earth metal supply impacts. The clue to our concerns is in the name – they are rare, with China often the largest source.

The semiconductor industry has had a rocky few years with the COVID-19 pandemic and unprecedented demand for processors and other key components. While some industries were heavily impacted by the pandemic, computers, smart devices, and entertainment industries have thrived. Global chipmaking supplies are already tight, so any news of potential disruption is troubling.

Mark Tyson
Mark Tyson

Mark Tyson is a Freelance News Writer at Tom's Hardware US. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.

  • digitalgriffin
    Gotta do, what ya gotta do.
    Reply
  • King_V
    More concerning development relates to potential rare earth metal supply impacts. The clue to our concerns is in the name – they are rare, with China often the largest source.
    No, they are not.

    https://foreignpolicy.com/2010/06/15/are-rare-earth-elements-actually-rare/
    So, are rare earth minerals actually rare?

    Not really. The term "rare earth" is an archaic one, dating back to the elements’ discovery by a Swedish army lieutenant in 1787. In fact, most (though not all) of the 15 (or 16, or 17, depending on which scientist you’re talking to) elements are fairly common; several of them are more abundant in the Earth’s crust than lead or nitrogen.
    Reply
  • Krotow
    Interesting - after decades of neon lighting in US where all neon gone?
    Reply
  • Co BIY
    What is rare about the "rare earths" is the difficulty and complexity in processing them. It makes spinning up alternative sources complicated and economically more challenging.

    Krotow said:
    Interesting - after decades of neon lighting in US where all neon gone?

    That is an interesting question ! I suspect that "Semi-conductor grade" has a lot to do with the answer.
    Reply