Impact of War on Semiconductor Supply

March 14, 2022

The global semiconductor chip supply chain which was earlier hit by the COVID-19 pandemic may again face a crisis due to the Russia-Ukraine war. Both Russia and Ukraine contribute to the global semiconductor supply chain.

Contribution of Ukraine

Ukraine is one of the world’s largest suppliers of Neon gas, which is used in the etching process. Thus, the usage of Neon gas is important for the fabrication of semiconductors. After the disintegration of the USSR in 1991, Neon gas production increased in Ukraine. Neon gas is a byproduct of steel production. It is produced by filtration of the gases released during the manufacturing of steel.

Contribution of Russia

Russia is the world’s largest exporter of Palladium and the current sanctions and export controls on Russia will affect the global supply of Palladium. Palladium is known for its conductivity and non-corrosive ability and is thus used for plating in the semiconductor industry.

Alternative sources

While the Russia-Ukraine war may create supply chain disruptions, it may not create a huge problem. This is because there are alternative suppliers for these materials. The United States and the United Kingdom are the major suppliers of Palladium. For the etching process, Neon can be replaced with Chlorine- and Fluorine-based gases.

Impact on the Russian Semiconductor industry

The growing sanctions on Russia will cripple its domestic semiconductor chip industry. Due to export and import controls, it will be difficult for Russia to import high-end processors and chipsets, which are needed for advanced defense and space systems.India also exports some semiconductor chips to Russia and the western sanctions, especially by the U.S. might impact India’s exports to Russia.

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