February 24, 2022 – Russia’s invasion of Ukraine could further strain supplies of semiconductor chips amid a shortage that has already caused global production disruptions for tech companies and automakers for more than a year. Russia and Ukraine are critical sources of neon gas and palladium that are used to produce semiconductor chips.
Russia produces neon, a gas that’s a byproduct of steel manufacturing, which is then sourced and purified by a specialized Ukrainian company. The price of neon shot up 600% the last time Russia invaded Ukraine in 2014. Russia also is a key palladium supplier. For the automotive industry, palladium also is a key metal used for catalytic converters. Palladium prices jumped by more than 7% on Thursday as part of a larger surge in precious metals.
The U.S. neon supply, which is used for lithography processes for chip production, comes almost entirely from Ukraine and Russia, according to Techcet, a California-based market research firm that specializes in critical supply chain materials and components.
