The chip industry faces a cliff as neon production drops

The chip industry faces a cliff as neon production drops

March 28, 2022: -Russia’s war in Ukraine could see the production of neon, a critical gas in advanced semiconductor manufacturing, fall to worryingly low levels when the world is already grappling with a chip shortage.

Neon is required for the lasers used in a chip production process called lithography, where machines carve patterns onto small pieces of silicon made by the likes of Samsung, Intel, and TSMC.

According to Peter Hanbury, a semiconductor analyst at research firm Bain & Co, over half of the world’s neon is produced by a handful of companies in Ukraine. According to Peter Hanbury, a semiconductor analyst at research firm Bain & Co.

Those companies include Mariupol-based Ingas and Cryoin and Iceblick, which are based in Odesa.

Still, Ingas and Cryoin have ceased operations in recent weeks amid attacks from Russian forces.

With world-leading Ukrainian firms that shuttered their operations, neon production will fall off a cliff as the conflict drags on.

Based on estimates from consultancy firm TechNet, worldwide neon consumption for semiconductor production reached roughly 540 metric tons in the process year. Given Ukraine produces over half of the world’s neon, the figure could fall below 270 metric tons in 2022 if the nation’s neon producers remain shut.

“Of the materials used in chip-making that could see a hit to their supply from the Ukraine conflict, neon poses the greatest potential challenge,” Hanbury told CNBC through an email.

The ongoing global chip shortage has already wreaked havoc on supply chains and led to lengthy delays for products such as new cars and games consoles like the PlayStation 5.

A potential global neon shortage threatens to make matters even worse.

About Us

We provide the insights on leaders who are responsible for taking their organization to new heights, all the while bringing together a group of talented individuals.

Recent Posts | Make Profit Not Waste | Stephen Pratt

Supply chain leaders, including VPs, often find themselves making bets with unknown financial consequences. Having started with largely infeasible plans generated by deterministic “one-number” planning systems, compounded by unexpected supply or demand disruptions, they are forced into last-minute adjustments to meet operational and financial goals.

Intelichain | Revolutionary Supply Chain Planning Solutions | Roei Aviram

Unsurprisingly, today’s supply chain faces numerous issues, including sustainability, technology, global economic and political instability, talent management, and supply chain resilience. Advanced forecasting algorithms and predictive analytics are used in supply chain management to help organizations of all sizes make better decisions by providing insights into what’s going on in their business at any given moment and predicting future trends.

GAINS | Empowering Companies to Make the Right Decision | Bill Benton

Ensuring the right products are in the right place and at the right time is critical for companies also dealing with supply chain constraints and a high degree of variability. Uncertainty has become the name of the game and the only way to effectively optimize inventory through continuous, data-driven assessments, planning, and decision-making.

Extensiv | Creating the Future of Omnichannel Fulfillment | Sheridan Richey

Food Huggers, a consumer brand that designs products to reduce waste at home, may be in an enviable position now but before they found Extensiv Order Manager, managing booming orders and staying on top of inventory was a huge operational challenge. The business has inventory spread across multiple geographically distributed warehouses, with orders received via multiple sales channels, including Shopify storefronts and Amazon.

The chip industry faces a cliff as neon production drops