Moscow, 8 March 2022 (TDI): As the Russian invasion of Ukraine continues, the global semiconductor chip shortage progressively gets worse. Material required for these chips such as palladium and neon is heavily sourced from Ukraine and Russia.
As the world continues to recover from the COVID-19 pandemic the end of the semiconductor chip shortage was finally in sight but the Russia-Ukraine crisis has significantly made the shortage worse.
Neon is used to make lasers that are critical for chips in a by-product of Russia’s steel manufacturing. While palladium is another material used for sensors and memories.
Ukraine produces 70% of the global supply of neon while 40% of the world’s Palladium comes from Russia. If the conflict persists the shortage will continue to get much worse.
Industries that are highly dependent on semiconductor chips will be severely affected. This includes the mobile phone and electronic industry, the car manufacturing industry, and appliances like washing machines and refrigerators.
Stellantis, the maker of Jeep SUVs has had to temporarily idle its manufacturing plant in Chicago amidst growing semiconductor shortages. Ford, another car manufacturer is working out ways to maximize production without compromising on quality as it too continues to face chip shortages.
“This means significant risks are ahead for many automakers, electronic device manufacturers, phone makers, and many other sectors that are increasingly reliant on chips for their products to work.” -Moody’s Analytics
During the 2014-2015 Russia-Ukraine crisis neon prices increased manifold and the same is expected to happen now. Moody’s also added that chip shortage will worsen and chip crunch will worsen if a deal is not brokered in the coming weeks.
Oil is also being severely affected by the ongoing conflict. Moody predicts that Europe will be the worst hit by the ongoing sanctions on Russia as Europe is a major recipient of Russian oil and gas. It is estimated that Russia holds 12% of the world’s oil supply and 17% of the world’s natural gas.
