About half of the neon used for chip manufacturing comes from two Ukrainian suppliers.
The launch of the new generation of PlayStation and Xbox has been marked by huge shortage problems that already lived PC components, in particular, graphics cards. Meanwhile, hardware companies have been struggling to maintain their production while making estimates on how long this situation would last in the industry.
The equipment could be damaged, something that would make it difficult to return to productionUnfortunately, estimates have added a new variableand this is the worst we could expect: a war. The conflict in Ukraine after the invasion of Russia would have directly affected two of the world’s main producers of neon for chips, as reported by Reuters. Ingas and Cryoin are the two Ukrainian companies that would supply between 45% and 54% of the neon of semiconductor grade in the world, according to calculations by Techcet, a company specializing in market research.
this neon is essential for lasers used in chip manufacturing. Both Ingas and Cryoin stopped production as Russian attacks on Ukrainian soil intensified. Although estimates vary regarding current neon stocks held by chipmakers, CFRA analyst Angelo Zino says that production could be affected if the conflict continues.
“If stockpiles run out before April and chipmakers don’t have orders booked in other regions of the world, we will likely find ourselves with more restrictions in the overall supply chain and the inability to manufacture the final product for many key customersZino assured. Larissa Bondarenko, director of business development at Cryoin, assured that the company will stop fulfilling orders in March if the violence does not stop.
Taiwanese companies had prepared to stockpile neonBondarenko pointed out that, although they could resist nearly three months with the plant closed, the conflict could damage the equipment, assuming a burden to resume operations. For its part, the Ministry of Economy of Taiwan, where the world’s largest chipmaker, TSMC, is located, assured that Taiwanese companies had prepared to accumulate “safety stocks” of neon, so there should be no problems to short term, although as Bondarenko explains, prices could come under more pressure than they had already received after the pandemic.
The conflict in Ukraine has not stopped dragging consequences within the video game industry, with many companies withdrawing their products from Russia. In recent days, we have been able to see how Nintendo ceased its exports, while Sony suspended the sale of PlayStation consoles and video games.
More about: Scarcity, War, Ukraine and Russia.