FX.co ★ World to face semiconductor shortage

According to The Global Times, citing reliable sources, the ban on exports of Russian inert gasses used in the production of semiconductors will escalate pressure on the supply chain in several countries. It may eventually lead to a shortage of chips in the global market and a surge in their prices.

Restrictions on Russian energy commodities may affect the production of semiconductors in China, Xiang Ligan, the CEO of the Beijing-based Information Consumption Alliance, said. Currently, China is the world's largest consumer of semiconductors. It is heavily dependent on their import. In 2021, the country imported chips worth $300 billion, used for the production of cars, smartphones, computers, televisions, and other devices. Many sectors are highly reliant on imported chips, Xiang Ligan stressed.

The negative impact will be less noticeable for industries, using chips that are produced by Chinese companies. However, Ligan does not rule out a massive shortage of semiconductors in the near future.

Earlier, Russia imposed export restrictions on technology and noble gasses such as neon, argon, xenon, etc. Inert gasses are crucial for the manufacturing of semiconductors. In turn, chips are used to make the microchips needed for gadgets, cars, and household appliances. Analysts have been warning about an acute shortage of semiconductors since the beginning of the coronavirus pandemic. The Russia-Ukraine conflict has only aggravated this problem.

Global prices for neon and xenon soared after Ukrainian suppliers Ingas and Cryoin, which deliver about 50% of the world’s neon gas for semiconductor manufacturing, shut down production. Russia accounts for 30% of global neon supplies. Japan and China are also major producers of inert gasses but their products are mainly consumed domestically.