To The Moon

The global "chip shortage" has been going on for a long time, and the war between Russia and Ukraine has made the chip supply chain even worse.

Russia and Ukraine are officially at war, and the impact of the semiconductor supply chain is further fermenting...

Today, the U.S. Department of Commerce released the results from the Risks in the Semiconductor Supply Chain Request for Information (RFI) issued in Sept. 2021. Key findings from the report provided data-driven information about the depths of the semiconductor shortage and underscored the need for Biden‘s proposed $52 billion in domestic semiconductor production.

Demand for semiconductors is as much as 17 percent higher in 2021 than it was in 2019, and consumers aren’t seeing commensurate increases in the available supply.

The majority of semiconductor manufacturing facilities are operating at or above 90 percent utilization, meaning there is limited additional supply to bring online without building new facilities.

Raw Materials Supple Will be Interruped After War

Russia and Ukraine are key sources of neon gas and palladium for the production of semiconductor chips. Due to the escalating situation in Russia and Ukraine, the stability of the neon gas supply chain has caused panic across the industry.

Neon is an inert gas, and the inert gas supply of Ukraine's semiconductor raw materials includes neon, argon, krypton, xenon, etc. Among them, neon gas is supplied by Ukraine for nearly 70% of the world's output. Although the proportion of inert gases used in the semiconductor process is not as high as that of other industries, neon, xenon and krypton are indispensable process gases in the semiconductor manufacturing industry, and the stability of the supply chain is extremely important.

California-based market research firm Techcet told CNBC: "Neon gas supplies in the U.S. for the lithography process used in chip production come almost entirely from Ukraine and Russia. Neon prices soared during the Russian-Ukrainian Crimean War in 2014. 600%.”

For the automotive industry, palladium is a key metal used in catalytic converters, and Russia and South Africa are important suppliers of palladium, supplying about 33% of global palladium demand. On Thursday, palladium prices rose more than 7%.

The White House warned chip suppliers earlier this month to diversify supply chains in case Russia retaliated against U.S. export curbs and blocked access to critical materials, Reuters reported.

"Semiconductor companies are prepared for disruption if Russia intervenes in the supply chain," a senior White House official told CNBC.

Department Secretary Gina Raimondo predicts that “we aren’t even close to being out of the woods.”

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