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  • Eli Richardson

Chip makers Prep for Russian Invasion

Eli Richardson

March 13, 2022

After several years of chip shortages due to the coronavirus pandemic, manufacturers prep for yet another hurdle, invasion. As Russia has invaded Ukraine the industry is threatened by the potential loss of two suppliers of key materials in production. These key production components include neon gas needed for lasers used in production and metal palladium. Russia and Ukraine might be the two most key suppliers of these materials with between a quarter and a half of the neon used in production coming from these countries, and a third of the palladium coming from Russia. These facts are particularly alarming when in the context of recent events in the industry. Coronavirus caused widespread chip shortages that are still being resolved.

However, the recent shortages could be a saving grace for semiconductor companies. A key development has been companies developing alternative suppliers during the pandemic. This has resulted in many companies having a reserve of materials to last six weeks to a month. An example of this adaptation comes from Taiwan Semiconductor Manufacturing Co. which is the world's largest semiconductor maker. The company was able to switch its neon supplier as invasion looked inevitable and now is reporting that it does not suspect supply problems.

Coupling the industry's experience during the pandemic with a past event, Russia's annexation of Ukrainian territory Crimea in 2014, leads to the industry as a whole feeling prepared to combat the supply shortages that could result from the Russian invasion.

Although the industry seems sure that it is prepared current stock prices of many semiconductor companies are down, which is to be expected with the current unrest. One thing is for sure, these companies may experience supply issues but are far more prepared than if this situation would have happened in the past.



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