Moreover, as a result of the Ukraine conflict, LMC Automotive has cut its forecast of light vehicle sales in Europe by 2 million units a year over the next two years. Palladium, a critical component of catalytic converters for cars, has climbed as much as 80% in price since the conflict started. Russia is also a major source of neon, used for etching circuits on silicon wafers. As Deloitte noted in a recent report, “The principal reason that Russia plays above its weight is that it is a major exporter of some of the world’s most important commodities.” 1 Russia is a significant source of many of the 35 critical minerals that the US Department of the Interior (DOI) deems vital to the nation’s economic and national security interests, including 30% of the globe’s supply of platinum-group elements (including palladium), 13% of titanium, and 11% of nickel. It’s not just oil and agricultural commodities that are under stress. Russia is also a major global exporter of fertilizers, which means any supply shortages, or restricted access, could impact crop yields globally. According to the Food and Agriculture Organization of the United Nations, Russia and Ukraine account for more than 25% of the world’s trade in wheat and for more than 60% of global sunflower oil and 30% of global barley exports. International Trade Commission.Among the most pressing vulnerabilities is an overreliance in Europe on natural gas and crude oil from Russia, as well as dependence on both Russia and Ukraine for key agricultural commodities. Neon prices rose 600% in the runup to Russia's 2014 annexation of the Crimean peninsula from Ukraine, since chip firms relied on a few Ukrainian companies, according to the U.S. Techcet estimates demand for all the materials will rise by more than 37% over the next 4 years, pointing to recent announcements by Intel, Samsung (005930.KS), and Taiwan's TSMC in Ohio, Arizona and Texas. William Moss, a spokesperson for Intel Corp, said the chipmaker was not anticipating any impact to neon supply.īut the issue is still concerning, because global chip supplies are tight and chip orders are only expected to pick up. Fluorine is another gas that has a large supply from that part of the world and could be affected, the executive added. But it wouldn’t stop semiconductor manufacturing," he added.Īccording to one power chip design startup executive, unrest in Ukraine has caused rare gas prices to increase and could cause supply issues. It would drive prices up," the person said. "Even if there was a conflict in Ukraine it wouldn't cut off supply. One person at a chipmaking company who declined to be named acknowledged that it has been looking into its supply of neon and other gases, some of which originate in Ukraine. Some chipmakers have been reviewing their supply chains to scan for potential fallout from conflict in Ukraine. Russia, which has massed over 100,000 troops along Ukraine's border, denies it plans to attack. The Biden administration has threatened to impose sweeping export controls against Russia if it invades Ukraine. Palladium is used in sensors and memory, among other applications. Neon, critical for the lasers used to make chips, is a biproduct of Russian steel manufacturing, according to Techcet. "Please let me know if potential supply disruptions to any of them are a concern for your company."
regarding Russian/Ukrainian production of a number of semiconductor materials," he wrote, referencing a summary by Techcet on C4F6, Palladium, Helium, Neon and Scandium from the troubled region. "As discussed on today's call, please see the attached document. Joe Pasetti, vice president of global public policy at the chip and electronics manufacturing suppliers group SEMI, sent an email to members this week gauging exposure to the vital chipmaking supplies, according to a copy obtained by Reuters. "We understand that other sources of key products are available and stand ready to work with our companies to help them identify and diversify their supplies." "Part of that is working with companies to make sure that if Russia takes actions that interfere with supply chains, companies are prepared for disruptions," the person said.
The White House declined to comment on the specifics of the conversations, but a senior official reiterated that the administration was prepared if Russia invaded Ukraine. Peter Harrell, who sits of the White House's National Security Council, and his staff have been in touch with members of the chip industry in recent days, learning about their exposure to Russian and Ukrainian chipmaking materials and urging them to find alternative sources, the people said.
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