Industry players said the Russia-Ukraine war is set to worsen the supply of semiconductors, as both the countries are important exporters of raw materials used in manufacturing of various chipsets.
According to the latest US Commerce Department report, chip shortages around the world will continue to exist in the late part of 2022 and possibly even into 2023. semiconductor the supply chain.
“The global semiconductor chip shortage, which has been covered only marginally, may worsen due to the current Russian-Ukraine tensions,” said Pallavi Singh, VP, Super Plastronics Pvt Ltd (SPPL).
Both Russia and Ukraine are important exporters of raw materials used in the manufacture of chipsets and semiconductors, such as palladium, which is used in memory and sensor chips, and neon gas, which is used for etching circuit designs.
“This could have an adverse effect on already rising freight costs and cause delays around the world,” she said in a statement.
Manufacturers see their shares of semiconductors fall global chip shortage, A recent survey of over 150 firms found that supply had fallen from an average of 40 days in 2019 to just five days at the end of 2021.
Millions of products – cars, washing machines, smartphones and more – depend on chips, also known as semiconductors.
Industry experts said black swan events, such as the ongoing war, have the potential to create more pressure on supply chains, potentially involving increased chip capacity and chip prices.
“Ukraine and Russia both also play an important role in the global semiconductor supply chain. Ukraine is an increasingly important source and supplier of raw materials, for example, semiconductor-grade neon used in semiconductor manufacturing,” said Prabhu Ram, Head -Industry Intelligence Group, CMRtold IANS.
Similarly, Russia is a major source of palladium which is used in many memory and sensor chips. In fact, it accounts for 45 percent of the global supply.
“While the semiconductor chip industry may not feel the direct heat from the war, upstream raw material suppliers providing these gases, and enabling chip companies, will face pressure,” Ram said.
Intel CEO Pat Gelsinger recently said he doesn’t expect the semiconductor shortage to end until 2023.
“We’re in the worst-case scenario now, every quarter, next year we’ll be incrementally better, but they won’t have a supply-demand balance until 2023,” Gelsinger had said.
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