The novel coronavirus epidemic, which has lasted for nearly two years, and the ensuing disruption of the supply chain have produced unexpected benefits for the semiconductor industry: large companies are not too short of key raw materials supplied by Russia and Ukraine.
It has been repeatedly reported that about 1/4 to half of the neon gas needed by the global semiconductor industry comes from Russia and Ukraine, and about 1/3 of palladium also comes from Russia. So after the conflict, the market worried about the soaring prices of crude oil and wheat, but also made a sweat for the semiconductor industry.
However, from a practical point of view, after the epidemic and a series of natural disasters and emergencies such as the fire at Renesas Electronics Factory and Texas Blizzard in the United States, the inventory and supply chain management policies of major companies have undergone fundamental changes. Mark Thirsk, managing partner of Linx, an electronic materials consulting firm, said that for semiconductor manufacturers, neon and other key materials for semiconductors are mostly in stock for six weeks to three months.
It is also hard to capture the anxiety of industry giants about the latest geopolitical events, at least from semiconductor manufacturers and media reports.
Infineon, a German chipmaker that has been hit hard by the supply chain, has made it clear that it does not expect production to be affected by the conflict and that there are alternative suppliers. A spokesman for Infineon said the company had increased its reserves of potentially affected raw materials and rare gases, including neon.
TSMC, the world's largest contract chip manufacturer, has also ensured that alternative suppliers of neon will not affect production, according to media reports citing people familiar with the matter.
Jimmy Goodrich, vice president of global policy at the Semiconductor Industry Association of America, said that the chip industry as a whole did not feel much pain, but if this had happened a decade ago, the situation in the industry would have been more difficult.
In fact, chip companies have experienced the rising price of neon and the taste of finding alternative suppliers around the world as early as after the Crimea incident in 2014.
It is worth mentioning that in the recent sanctions against Russia, the United States asked not to sell chips to Russian strategic industries, but did not make it clear that no chips should be sold to Russia. Even so, Intel, Nvidia and AMD have all announced the suspension of related business under the influence of the general environment.
Although there are no immediate worries, there are still far-sighted worries.
Mark Thirsk, a partner at Linx, expects an adequate supply of neon for roughly six months in the inventory and gas supply chain across the semiconductor industry, but prices will still soar after that point, similar to that seen in 2014. At that time, the price of gas, which used to sell 25 cents per liter on the spot market, shot up to $5.
But even if the price of neon doubles, it is still a very small part of the cost of tens of billions of dollars in the semiconductor industry.
Bernstein analyst Stacy Rasgon said in a research report that the total output value of global semiconductor neon is only about $100m a year, compared with more than $500 billion in revenue from the global semiconductor industry.
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