The war between Russia and Ukraine causes the market to worry about the disruption of special gas supply: prices may fluctuate, but there is no need to worry about aggravating core shortages and sharp rises and falls.

The war between Russia and Ukraine has triggered the latest concerns about the supply chain of the chip industry. However, multiple interviews with reporters of the Financial Associated Press have learned that although the affected neon and other special gases are quite important, the overall consumption is relatively small, the relevant supply channels are diversified, and domestic production capacity continues to open, which is not expected to have a serious impact on chip production; it is expected that the prices of related products will continue to fluctuate and rise in the future, but the skyrocketing situation of the last Ukraine crisis will not occur.

The sufficient supply of neon will not aggravate the shortage of chips.

Inert gases such as neon, krypton and xenon are key materials for chip manufacturing. According to the latest data released by Techcet, a US market research company, in early February, Ukraine accounts for 70 per cent, 40 per cent and 30 per cent of global demand for neon, krypton and xenon, respectively. Such a high share has also triggered a new round of concerns about a shortage of upstream materials, which in turn hampers chip production. The secondary market aimed at speculation opportunities, yesterday after noon, Walter Gas, Camette Gas, Jinhong Gas and so on showed obvious changes.

However, the market size of neon gas, which is mainly affected by the Russia-Ukraine incident, is limited and the supply is relatively adequate. Including United Power, Micron, SK Hynix and other manufacturers also spoke out at the first time, saying that inventory and alternative supplies are sufficient, so there is no need to worry too much about chip production.

"the amount of neon gas used in semiconductors is not too large, and China has sufficient production capacity for a variety of rare gases, including neon gas." Ren Lu, a senior analyst in China's special gas market and general manager of the gas circle, a global authoritative gas think tank, said in an interview with reporters.

According to the Global Electronic rare Gas Market Research report 2021 released by the Gas Circle, the global electronic neon market is about 1.2 billion yuan in 2020.

Ren Lu believes that even if the possible follow-up international sanctions and countermeasures are taken into account, the Russia-Ukraine incident will only have a certain impact on semiconductor enterprises in individual countries, including a short-term rise in gas prices, but it will not aggravate the chip shortage in the entire industry.

The current price has been released and it is expected that there is still room for domestic manufacturers to replace.

Back in 2015, the Crimea incident, also in Ukraine, contributed to sharp fluctuations in neon prices, which rose rapidly from 750 yuan per cubic meter that year to an all-time high of 25000 yuan in mid-July. but then quickly fell back to around 3000 yuan in October.

With regard to the price trend and follow-up judgment of the relevant gas, Zhang Wei said that since mid-February, the neon market has rebounded under the influence of Ukrainian geopolitics, while krypton and xenon have mainly benefited from the tight supply and demand and the support of the market mentality supported by the situation abroad, short-term prices may continue to hover high, but a sharp rise similar to 2015 will not occur.

Specifically, "the mainstream transaction price of neon market today is 1700-2000 yuan / cubic meter, which is flat compared with the end of January. Under the influence of geopolitics, the market mentality is OK, and it is expected that the short-term neon market can still be narrow and upward. The overall supply of xenon market is tight. At present, the mainstream market talks are at 250000-290000 yuan / cubic meter, up 20, 000 yuan / cubic meter compared with the end of January. The price of krypton mainstream distributors is between 26000 and 29000 yuan per cubic meter, up 4000 yuan per cubic meter from the end of January. " Zhang Wei said.

Ren Lu also believes that the price increase of related products in the early period has partly reflected the expectation of the impact of the conflict between Russia and Ukraine, and the price change is mainly caused by the imbalance between supply and demand.

"in recent years, the demand for rare gases in the semiconductor and aerospace sectors has been very significant, and it is expected that its prices will continue to fluctuate and rise in the future. But the situation similar to the sharp rise and fall in 2015 is basically not going to happen again," Ren Lu further explained to reporters. "Today, China's neon supply has increased several times compared with 2015, while the global neon gas dependence on Ukraine is not as high as it was then. The impact of the Russian-Ukrainian crisis in the industry has also been prepared for a long time, so prices basically will not rise and fall sharply. "

Walter Gas also told the Financial Associated Press yesterday that a small portion of the raw materials for its photoetching products (mainly neon gas, etc.) are purchased from Ukraine, but as there are also domestic suppliers, the current situation in Ukraine has little impact on supply. In addition, the price of photoetching raw materials has been in an upward cycle since the end of 2020, but it has not changed significantly as a result of the situation in Ukraine.

In addition to the price, the market expansion of domestic electronic special gas manufacturers has also attracted much attention, and a number of securities firms have concluded that a similar supply crisis will provide more market opportunities for domestic electronic special gas manufacturers. Lithography giant ASML said publicly on Wednesday local time that it was looking for other sources for a small amount of neon gas used in its factories in order to prevent the conflict between Russia and Ukraine from disrupting supply.

In this regard, Ren Lu said that the integrated circuit field has relatively strict requirements for electronic special gas supply, and domestic suppliers have independent production capacity of some products, but the main difficulty is to prove to customers that their supply is sustained and stable and product quality is continuously guaranteed. At present, the localization rate in this field is relatively low, especially in high-end processes, more than 80% of the products are still supplied by overseas manufacturers, and there is still a lot of room for domestic manufacturers to grow.

"We (the gas circle) interviewed a large foreign semiconductor manufacturer (8-inch line) in East China last year, and of the 63 electronic special gases used by the company, only 4 were sub-assembled or produced by domestic enterprises in China. From this point of view, the growth space of domestic electronic special gas enterprises is still very large. Driven by the tide of localization, the verification opportunities of domestic manufacturers are much better than before. Each electronic special gas company has its own leading products, and the verification of individual products is more ideal. "