More Bad News For Chip Supply

During the first half of 2020, the world saw the start of a global chip shortage. The chip shortage has been ongoing without any immediate relief in sight. Many professionals have theorized that production would increase in 2022, with some components pushing into 2023 for a more stabilized supply.

While it is still a long time without chips, there was at least a light at the end of the tunnel, a time when chips would be freely available again. Unfortunately, that has, once again, changed.

Russo-Ukrainian War

The ongoing war in Ukraine has put chip manufacturing in a difficult place once again. Ukraine is the world’s biggest supplier of neon, supplying half of the world semiconductor grade neon over the last few years. Ingas and Cryoin are the two big Ukrainian suppliers of neon, both of which have ceased operations during this time of war.

Should the conflict continue into the month ranges rather than mere weeks, this will spell bad news for international chip supply. Large semiconductor manufacturers Intel and TSMC will typically keep two to three months worth of neon. While the stock for purchasing more from Ingas and Cryoin has already been affected, if the current state of affairs continues, nearly half of the world Neon supply will disappear.

Neon In Chips

The neon in semiconductor manufacturing is not used for the chips themselves, but for the lasers in the lithography stage of chip manufacturing. Lasers etch features onto the chips, something that is extremely difficult to do with any other production method.

As it stands, chip manufacturers use 75% of the world’s neon production each year. With other production facilities unable to cope with the extra demand, neon will likely go into extreme shortages within the next 3 months. The remaining 25% of neon used is used in industrial lasers and Lasik eye surgery.

Alternative To Neon

The neon currently produced comes as a by-product of steel manufacturing, making no easy or feasible way to open a neon production plant elsewhere. ASML has been seeking alternative sources of neon, to no immediate success. There is also the possibility of alternatives to neon, but this would require a complete rework of chip manufacturing processes, putting more strain and cost on the already struggling semiconductor supply.

Now, nobody is in a supply or financial position to attempt to find an alternative to neon unless they hit the jackpot at Black Lotus online casino. The best option would be to find alternative supply sources for neon, which is proving to be a difficult feat.

What Is Affected?

If you have yet to be affected by the chip shortage which has been ongoing since mid 2020, count yourself as one of the lucky few. The chip shortage will impact any electrical component that requires electronic control.

Now, the two industries that have been hit the hardest are the computer industry and the automotive industry. Prices for computer components are higher than they have ever been, as supply cannot satisfy the demand. For the auto industry, professionals theorize that the first round of chip shortages prevented the construction of over 7 million new cars. This is without taking into consideration the even worse chip shortage we may soon see due to neon shortages.

Candice Cearley

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