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SEMICONDUCTOR CHIP MANUFACTURING PRODUCTION DELAYS COULD DEEPEN

SEMICONDUCTOR CHIP MANUFACTURING PRODUCTION DELAYS COULD DEEPEN

Two firms in Ukraine produce nearly half of the global neon supply that is needed to manufacture semiconductor chips. Over the past two weeks, these two firms have suspended operations in the face of the Russian invasion.

In fact, most of the world’s neon is used to operate lasers, which etch circuit patterns in semiconductor chips. That means the chip industry is now facing a shortage of a critical supply — at a moment when it’s already stretched to capacity.

Prices are expected to increase as well. Neon prices rose 600% in the run-up to Russia's 2014 annexation of the Crimean Peninsula from Ukraine, according to the U.S. International Trade Commission.

Companies elsewhere could initiate neon production but ramp up time could be up to two years.

What is the ultimate outcome? In the simplest terms, increased prices for goods certainly in the short and mid-term. But, where there is demand, supply will increase to meet that demand for sure. What will be the ultimate cost; that will take some time to be known.

 

03/15/2022

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