Russia-Ukraine crisis may worsen chip shortage situation: Moody’s Analytics
Premium- Russia supplies the global semiconductor industry with rare metals and Ukraine supplies specialty gases required by the chip-making industry.
New Delhi: The ongoing Russia-Ukraine conflict is likely to aggravate the semiconductor chip shortage situation globally as the two countries locked in an armed battle happen to be major players of gases that are critical to the production of chips, according to a report by Moody's Analytics.
Moody's Analytics stated that apart from food and energy, the ongoing war may have massive ramifications in the already acute semiconductor chip shortage scenario. Russia supplies the global semiconductor industry with rare metals and Ukraine supplies specialty gases required by the chip-making industry.
“Neon and helium are both gases critical to the production of chips, and Russia and Ukraine are both major players in the global supply chain—so much that neon prices went up more than 10 times following the Russian annexation of Crimea in 2014," said the report.
According to the report, there is potential that the stress extends to the supply chain of semiconductors, which are key to manufacturing autos and other electronic equipment in the Asia-Pacific region.
The report further highlighted that palladium, another key component of the chipmaking process, may be affected given that Russia controls a quarter of the world’s palladium stock.
However, Moody’s Analytics, noted that it does not see an immediate impact on chip production because most major chipmakers have stockpiled raw materials due to significant demand growth during the pandemic.
“But if the Russia-Ukraine conflict drags on, chipmakers in Taiwan, South Korea, Japan, China and other countries will feel the impact. This will likely result in higher chip prices and longer lead times moving forward," the report added.
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