Russia could Hit the US Chip Industry – White House Fears. The White House has called on the chip industry to find alternative supply routes. The US government is fearful of Russia’s attack on key raw material supply systems.
A recent report by the market research firm Techcet discusses the possible effects of Russia’s retaliatory attitude. The report, released on February 1, says US semiconductor chip manufacturers rely on various sources in Russia and Ukraine for other raw materials, including neon and palladium.
According to Techcet research, Ukraine probably supplies more than 90 percent of the neon used in the construction of semiconductors in the United States. About one-third of the palladium used in manufacturing comes from Russia.
Reuters reports that Peter Harrell, head of the White House Security Council, and his staff have been in contact with representatives of the chip manufacturing industry in recent days. Concerns are being raised about finding alternatives to reduce dependence on Russia and Ukraine for raw materials.
Reuters reported that the White House declined to comment in detail on the talks with the chip makers. However, a senior official said the Biden administration was ready to deal with Russia’s hit on Ukraine.
Part of the work that is going on with the companies is trying to make sure that they are ready for any attempt by Russia to disrupt the supply system.
Joe Pasetti recently sent an email to SEMI, the organization of international chip manufacturers and suppliers, asking if any members of the organization were in danger of falling into disarray over raw materials in the wake of the Russia-Ukraine conflict. Reuters had the opportunity to see the email.
Please see the attachment that was discussed on today’s call. In the case of various semiconductor raw materials produced in Russia and Ukraine, “if your organization fears any interruption in the supply of that rush, please let me know,” Pasetti wrote in an email. The document attached to the email contained a summary of Text’s report.
Among the raw materials discussed, neon is produced as a byproduct of Russian steel production. It is then refined in Ukraine. Palladium, on the other hand, is used in the manufacture of sensors and memory chips.
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The Biden administration has threatened to impose export sanctions on Russia if it launches an attack on Ukraine. The Russian government has claimed that it has no plans to invade Ukraine, despite a rally of 100,000 troops on the border.
In such a situation, manufacturers are looking for alternative sources of raw materials. An unnamed source told Reuters: “Even if there is a war in Ukraine, it will not disrupt the supply chain.” Rather, it will increase the price. The market will get smaller. However, this will not stop the production of semiconductor manufacturers.
Chipmaker Intel is also not expecting any adverse effects from the Russia-Ukraine conflict on the neon supply system, said William Moss, a spokesman for the company.
Even then, Reuters commented that the whole matter was as serious as fear. Text predicts that demand for all raw materials will rise by 37% over the next four years. On the other hand, after Russia occupied Crimea in 2014, the price of neon increased by 600 percent.
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