Ukraine crisis: Chipmakers anticipate limited impact on chip shortage

The Covid-19 pandemic created an unprecedented chip shortage across the globe that was supposed to ease off by 2022. But the ongoing Ukraine crisis raised concerns that the existing chip shortage could be escalated further. Now, chipmakers have predicted a limited disruption from the ongoing Ukraine-Russia conflict.

Just like Taiwan, both Russia and Ukraine play an important role in the global semiconductor industry. Ukraine supplies semiconductor-grade neon to the US, which is used in lasers for making chips. It covers 90% of US’ requirements for the purpose. Russia, on the other hand, supplies around 35% of the palladium used in the country and it is used in sensors and memory among other things. The Russia-Ukraine conflict had raised concerns that the war could lead to chip shortage and consequently lead to spike in price.

However, chipmakers have said that assured that there won’t be any direct impact of the crisis owing to the diversified sourcing technique opted by the companies. “We understand that reports of potential disruption of supply of minerals and noble gases, due to ongoing tensions between Russia and Ukraine, are concerning for the semiconductor industry,” Micron Technology told Reuters adding that it had diversified sourcing for its supplies, which in turn would minimise the impact for the company.

Chief of the Semiconductor Industry Association (SIA), John Neuffer, reiterated similar thoughts. “…the semiconductor industry has a diverse set of suppliers of key materials and gases, so we do not believe there are immediate supply disruption risks related to Russia and Ukraine,” he said in a statement to Bloomberg.

GlobalFoundaries and Intel had similar views. “Our strategy of having a diverse, global supply chain minimises our risk of potential local interruptions,” Intel told the publication. “We are not totally immune to global shortages, but our footprint provides us with more insulation,” GlobalFoundaries added.Notably, the Russia-Ukraine conflict has been going on since 2014. Anticipating such a situation, chipmakers have diversified their supply chain, which is why the impact of the ongoing is expected to be minimum.

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