Russia’s attack on Ukraine halts half of world’s neon output for chips

Who knew that Ukraine supplied half the world’s Neon necessary for semi-conductor chips. It turns out that Ukraine is full of good stuff. According to research firm Techcet, Ukraine supplies more than 90% of the U.S.’s semiconductor-grade neon, a gas integral to the lasers used in the chip-making process, while Russia supplies 35% of the U.S.’s palladium supply, a rare metal that can be used to create semiconductors.

Ukraine is rich in its own energy as well. So why we concern ourselves with the NATO issue and whether Putin wants to “build back better” by getting the old gang that broke off in the 1990’s back together again, my bet is that the “Bread Basket of Europe” among other things, is a nice plum to pick. There are already rumblings about the coming wheat shortages, let’s throw in Neon as well.

What in the world is even Neon? One might ask why the U.S. doesn’t figure out that this might be a good idea to manufacture the stuff here in the U.S.

Neon is a gas.

Neon is produced from air in cryogenic air-separation plants. A gas-phase mixture mainly of nitrogen, neon, and helium is withdrawn from the main condenser at the top of the high-pressure air-separation column and fed to the bottom of a side column for rectification of the neon.^[42] It can then be further purified from helium.

Global neon prices jumped by about 600% after the 2014 Russian annexation of Crimea,^[46] spurring some chip manufacturers to start shifting away from Russian and Ukrainian suppliers^[47] and toward suppliers in China.^[45] The 2022 Russian invasion of Ukraine also shut down two companies in Ukraine that produce about half of the global supply,^[46] and is likely to exacerbate the COVID-19 chip shortage,^[45][44] which may further shift neon production to China.^[47]

Neon is used as part of the lithography stage of chip manufacturing, the step that involves using lasers to draw features onto the silicon wafers. Chipmakers account for 75% of global demand for neon, with the remainder going to industrial lasers and Lasik eye surgery, according to Bernstein analyst Stacy Rasgon.

Newsmax:

Ukraine’s two leading suppliers of neon, which produce about half the world’s supply of the key ingredient for making chips, have halted their operations as Moscow has sharpened its attack on the country, threatening to raise prices and aggravate the semiconductor shortage.

Some 45% to 54% of the world’s semiconductor-grade neon, critical for the lasers used to make chips, comes from two Ukrainian companies, Ingas and Cryoin, according to Reuters calculations based on figures from the companies and market research firm Techcet. Global neon consumption for chip production reached about 540 metric tons last year, Techcet estimates.

….

Before the invasion, Ingas produced 15,000 to 20,000 cubic meters of neon per month for customers in Taiwan, Korea, China, the United States and Germany, with about 75% going to the chip industry, Nikolay Avdzhy, the company’s chief commercial officer, said in an email to Reuters.

The company is based in Mariupol, which has been under siege by Russian forces. On Wednesday, Russian forces destroyed a maternity hospital there, in what Kyiv and Western allies called a war crime.

…

Cryoin, which produced roughly 10,000 to 15,000 cubic meters of neon per month, and is located in Odessa, halted operations on Feb. 24 when the invasion began to keep employees safe, according to business development director Larissa Bondarenko.

Bondarenko says prices, already under pressure after the pandemic, had climbed by up to 500% from December. According to a Chinese media report that cited Chinese commodity market information provider biiinfo.com, the price of neon gas (99.9% content) in China has quadrupled from 400 yuan/cubic meter in October last year to more than 1,600 yuan/cubic meter in late February.

Read Newsmax: Russia’s Attack on Ukraine Halts Half the World’s Neon Output for Chips | Newsmax.com

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