Ukraine Conflict Threatens Global Semiconductor Supply With Neon Gas Shortage
The Russian invasion of Ukraine disrupts the global supply of neon gas, a critical component for chip lithography, posing a severe threat to semiconductor manufacturing and downstream industries.
The crisis in Ukraine causes massive disruption in the global semiconductor industry, which already struggles with pandemic-related challenges and insufficient manufacturing capacity. This latest threat sends shockwaves through multiple sectors, including high tech, automotive, consumer electronics, and household appliances, because chip production relies heavily on materials sourced from the conflict zone.
Ukraine serves as a prime global supplier of neon gas, providing up to 90% of the semiconductor-grade neon used in the United States and about 70% of the worldwide supply. Chip fabrication requires this specific gas to operate the lasers during the lithography phase, meaning that without an adequate supply of neon, semiconductor production comes to an abrupt and absolute halt. The region also supplies significant amounts of other critical gases, such as xenon and krypton.
This concentrated supply chain stems from an accident of manufacturing history, as neon is a byproduct of older steel mills that are now largely located in eastern Ukraine. Former Soviet facilities originally captured these rare waste gases for military laser and missile programs, but while other nations modernized their steel infrastructure and abandoned gas collection, Ukraine continued to operate these old mills and inadvertently became the dominant global supplier of these strategically essential materials.