Breaking: US has banned semiconductor supply to Russia

46th US President Joe Biden in a live address has announced actions to continue to hold Russia accountable for its ongoing invasion of Ukraine. During his speech, Biden announced that the US ” is choking off Rusia’s access to technology like semiconductors to sap its economic strength and weaken its military for years to come.”

The US is banning sales of any chips developed with American technology to Russia. While the US only has a small base of semiconductor manufacturing, its companies are leaders in the field of semiconductor design and chip patents, on which many foreign manufacturers rely to design their own chips.

To recall, the US had previously used similar sanctions to block Chinese tech major Huawei Technologies, which was then the largest smartphone and telecom equipment supplier, majorly hampering its business.

CEO of the US Semiconductor Industry Association (SIA), John Neuffer in a statement put out earlier has stated that a ban on selling semiconductors to Russia will not affect global suppliers much considering that “Russia is not a significant direct consumer of semiconductors.” He further stated that the country only accounts for 0.1 percent of global chip purchases.

However, do keep in mind that Russia and Ukraine are major suppliers of neon gas and palladium both of which are major elements used during the chip manufacturing process. Back in 2014 when Russia first invaded Ukraine, chipmakers started diversifying neon sourcing as the war had caused the price of neon to spike by 600 percent. By now, a lot of chipmakers are prepared to switch suppliers, which will lower the impact on neon supplies.

In short term, these sanctions might not affect Russia, as it roughly sources around 70 percent of its chip supplies from one of its allies, China, which is likely to ignore what the US is saying. However, the Chinese chip manufacturing market is currently not as equipped and can only produce relatively low-end chipsets.

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