In times such as these, it is difficult to continue “business as normal.” While we provide the following blog for informational purposes, it’s important to note our hearts and support go out to all those affected by Russia’s aggression towards Ukraine. We are heartbroken as we stand with Ukraine and hope a path to peace is ahead. Discussing how the war may impact gas supply and the semiconductor industry pales compared to the ongoing harm and displacement that many are currently facing. Keep reading for more information on how the Russia-Ukraine war will impact lead time, supplies, etc.
Ukraine’s Neon in Semiconductor Gas Supply
The industry is still seeking to recover from the global semiconductor shortage. Due to the pandemic, fires, and floods, the shortage worsens. While many have seen improvements, it’s possible that Russia’s war in Ukraine could result in another extension of the shortage. Ukraine houses half of the world’s neon gas. Neon gas is a critical component of the semiconductor production process. More specifically, this gas enables small lasers needed for lithography. Companies in Europe, Japan, and others are reliant on gas, but most of the neon is shipped to the U.S. With the shortage already expected to last until at least 2023, the addition of a neon gas shortage would likely lengthen this time. Similar to the other disruptions in the supply chain, a neon gas shortage would impact the entire globe. Goods that rely on semiconductors, such as cars, computers, and phones, are at risk of further increasing prices.
How will the Russia-Ukraine War Affect the Industry?
In addition to neon, Ukraine also provides other raw material gases such as argon, krypton, and xenon. Trendforce speculates that though the shortages in gas supply won’t immediately impact production, it will ultimately lead to increased prices across the board. Under normal circumstances, the impact of the war would undoubtedly be felt; however, with the industry already under so much strain, this war will only exacerbate the issue.
Lead Time Extensions
Lead times continue to increase for the industry. Compared to October 2021, February 2022 saw an increase in lead times for semiconductor orders from 5 to 15 weeks. Some processors even have a maximum lead time of 99 weeks. The average lead time for 16-bit processors was 44 weeks in February 2022. That’s an increase of 15 weeks just from October 2021. Many expect lead times to increase even further due the Russia’s invasion of Ukraine.
With the uncertainty of the current Russia-Ukraine war, there’s no sure prediction of how the situation will impact the industry. While prices and lead times continue to increase, the industry will need to utilize flexibility, communication, and relationships. Most importantly, however, we stand with Ukraine. The safety and security of Ukrainians are of our utmost concern and importance. We hope there is a path to peace soon.