Neon gas production shuts down in two major manufacturing plants in Ukraine

Chip disruption may take another hit as the supply chain continues. Neon gas production shuts down in two major manufacturing plants in Ukraine.

The Russia-Ukraine invasion has been running for more than three weeks now. The propaganda running around got out of hand. When the coronavirus forced people into lockdowns, manufacturing plants were cut off. It caused global supply chain issues. Along with critical products, the tech market also took a hit.

One of the critical components is computing chips. As innovative technology is growing, almost all types of techs we have need some sort of chips. These chips are essential souls of global tech, taking another hit as Neon Gas chip fabrication is halting. Two core facilities are shutting down.

Reports first came in when Reuters calculated that two of the largest fab suppliers are in the midst of the Russia Ukraine conflict. Ingas and Cryoin make up about 45 to 54 per cent of the world’s neon chip fabs. This company’s electronic material research firm Techet provided the initial report.

GlobalFoundries spokesman said, “We continue to monitor the situation very carefully and contact our suppliers daily.” The spokesman also discussed the flexibility of “cross-qualify” fabs and leveraging “alternative sources outside Russia or Ukraine for key suppliers.”

If we look at large suppliers such as Intel and TSMC, they have a diverse portfolio.

Manufacturing plants across the globe helps in the cheaper distribution processes and is not limited to local conflicts.

Taiwan economy ministry said TSMC is not expecting any supply chain issues in the near term. They are already prepared for such situations. They have enough supply of neon gas “safety stocks” to work with. When asked, Samsung and GlobalFoundries were not the immediate responders on the issue, but later, GlobalFoundries responded.

Neon gas is critical for manufacturing semiconductor chips, and the supply halt is making operations complicated. Explosions skyrocketed on Thursday morning in at least seven Ukrainian cities. The full-scale Russian invasion was first targeted at Odesa, and it is a seaside city around the Black Sea. The Black Sea is one of the business ports of the country, and also Cryoin is located there. Cryoin makes neon gas which is a substance used to power lasers. These lasers are patterned into computer chips.

Business director Larissa Bondarenko said that they decided employees should stay at home for a couple of days until the situation is safe for them. They want “to make sure that everyone is safe.”

Semiconductors are the mechanical brains of our phones, computers, laptops, smart home gadgets and even smart cars. As the pandemic shortened up the supply of these electronics in 2021, every major manufacturer that needs semiconductors in their products is suffering. Companies like General Motors shut down entire facilities due to the shortage. One of the world’s largest chip buyers is Apple. According to Bloomberg, they ordered 10 million fewer chips for iPhones in October.

Ukraine is one of the many choke points for the global semiconductor industry, and neon gas production takes up a considerable portion. Wired said, “the Russian aggression in Ukraine is making the industry nervous.” In 2014, the annexation of Crimea caused the neon gas prices to skyrocket to 600 per cent.

The government of the US and Japan is making up plans that the situation does not repeat itself. But the war aggression is happening, and it is already too late. Unless there is an urgent solution to the matter, it may be even devastating. Setting up plants for this high-quality production is no easy task and takes up a vast amount of time and resources.

President and CEO of TechCet said, “someone has to purify it and take out the other (gases), and that’s where Cryoin comes in.” Drawbacks of the supply chain caused global product prices to spike, and it is another bite in the dust.