Russia Bans Export of Neon Gas – Essential Element in Electronics Chip Manufacturing
In the ongoing retaliatory back-and-forth between Russia and the rest of the world on trade, Russia has issued the latest offensive by banning inert noble gases like helium and neon from being exported.
Russia and Ukraine Own 80% of Global Neon Supply
Russia and Ukraine are the two leading producers of neon gas, as well as other critical noble gases xenon, krypton, argon, and helium. Ukraine supplies around 50% of the global neon supply out of two factories, Ingas and Cryoin, which have stopped production since the onset of the conflict with Russia. Additionally, Russia produces another 30% of global neon supply.
75% of the total global neon gas production is used by the electronics semiconductor industry. Losing access to Russian and Ukrainian noble gas supplies could create massive disruptions in chip fabrication unless an alternative is found.
Noble Gases Essential Use in Chip Fabrication
Noble gases are a critical element in semiconductor chip fabrication, powering high-precision lasers for etching microchips. Losing access to Russia’s supply of noble gases would have a severe impact on chip manufacturing and further disrupt the electronics supply chain industry.
Neon, specifically, helps create deep ultraviolet (DUV) light that is used in the lithography of chips, creating a pattern in the silicon structure. DUV lasers are the industry standard in semiconductor manufacturing. The wavelength of light used in this photolithography process sets the smallest feature size of the chip.
International Impacts Due to Neon Gas Ban
With countries across the globe working to ramp up their domestic chipmaking operations, the demand for neon gas will likely continue to grow.
A number of businesses internationally will feel a substantial impact as a result of Russia’s neon export ban and corresponding price spike. Notably, Samsung Electronics, located in South Korea, due to their heavy reliance on the import of neon gas. According to BusinessKorea, South Korea is 100% dependent upon imported neon gas, with 23 percent from Ukraine and 5 percent from Russia.
As a result of Russia’s ban, China is likely to become the supplier of the world’s demand for neon gas.
Neon Supply Chain Disruption & Neon Gas Market
With the global neon supply disrupted, manufacturers and chip fabrication companies are re-evaluating the neon supply chain. New entrants into the neon gas market are emerging: Air Liquide, Linde, Messer, Iceblick, Air Products, Air Water, Core Gas, Wuhan Steel, Matheson Tri-Gas, Baosteel, and more.
The neon gas market is forecasted to reach approximately $61 million USD by 2025.
Mitigate Supply Chain Risk by Monitoring Critical Situations
It is important to maintain a close eye on manufacturers and businesses as they respond to events that may impact the global economy. In particular, we are monitoring businesses and fab sites that are located in Russia or Ukraine, or closely related to those countries to help you understand how your business may be affected.
As neon gas supply, demand, and pricing fluctuates, this will have an impact on the price and availability of microchips. Having a BOM Manager with access to Supply Chain Risk Management and Inventory Risk reports will give you end-to-end visibility on how your parts are being affected and whether you need to search for alternatives.