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Neon crisis worsens, Cryoin and Ingas stop production

benb

Active member
The alamist mainstream take: https://www.cnbc.com/2022/03/12/rus...lts-half-of-worlds-neon-output-for-chips.html
There have been shortages before: https://pubs.acs.org/doi/10.1021/cen-09410-notw7
Iceblick, Cryoin and Ingas are 70% of the (high purity) neon supply: https://www.datacenterknowledge.com...stry-should-worry-about-potential-war-ukraine
"Available stocks and supplies are already proving insufficient for current demand levels." https://www.tomshardware.com/news/g...ors-threatened-by-russian-invasion-of-ukraine
Interesting PDF about fractional distillation: https://rdmathis.com/wp-content/upl..._Gases_to_High_Purity_rev2Tech_Sheet_3_-1.pdf
" All of the inert gases can be fractionally distilled from the air. However, in the United States helium gas is distilled as a by-product from the liquification of natural gas in certain Texas wells."
"The process is convenient only for helium gas. Other inert gases require special cryogenic facilities to keep from liquefying the inert gas while removing the reactive gases."
Asianometry has a good youtube video on the shortage:

It would sure be nice if the world would stop ending. However, in the post-world world, the US may need to be more self-sufficient and reshore supply chains. That may mean more air separation unit (ASU) direct air neon, more neon byproduct from LNG, more recycling, or other, probably expensive, measure.
 
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benb

Active member
Summary of the neon crisis as of May 1, 2022: Cryoin and Ingas stopped production on March 11, 2022, in Mariupol and Odessa. I‘m noting the date since it seems 6 months is the typical inventory buffer, meaning September is when the real crisis begins. Mariupol is unlikely to produce neon soon due to the war, and Odessa is in the line of sight of the Russian advance, although unlike Mariupol it is not in Russian hands currently.

South China Morning News article indicates that the neon shortage may be good for China, implying China will fill the market void. Question: Does China have the purification facilities for semiconductor-grade neon?
 
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hist78

Well-known member
Summary of the neon crisis as of May 1, 2022: Cryoin and Ingas stopped production on March 11, 2022, in Mariupol and Odessa. I‘m noting the date since it seems 6 months is the typical inventory buffer, meaning September is when the real crisis begins. Mariupol is unlikely to produce neon soon due to the war, and Odessa is in the line of sight of the Russian advance, although unlike Mariupol it is not in Russian hands currently.

South China Morning News article indicates that the neon shortage may be good for China, implying China will fill the market void. Question: Does China have the purification facilities for semiconductor-grade neon?
In TSMC Q1 2022 earnings conference call on April 14, 2022, TSMC CEO C. C. Wei stated that TSMC will not face the shortage.

"For specialty chemicals and gases, including Neon and Xenon we source from multiple suppliers in different regions, and we have prepared a certain level of inventory stock on hand. We are also working closely with our suppliers to further strengthen the resilience and the sustainability of our supply chain. Thus, we do not expect any impact on our operations from materials supply."
 

lilo777

Active member
Summary of the neon crisis as of May 1, 2022: Cryoin and Ingas stopped production on March 11, 2022, in Mariupol and Odessa. I‘m noting the date since it seems 6 months is the typical inventory buffer, meaning September is when the real crisis begins. Mariupol is unlikely to produce neon soon due to the war, and Odessa is in the line of sight of the Russian advance, although unlike Mariupol it is not in Russian hands currently.

South China Morning News article indicates that the neon shortage may be good for China, implying China will fill the market void. Question: Does China have the purification facilities for semiconductor-grade neon?
I believe, in Odessa they produced neon using the materials that they were getting from the Russian metallurgical plants which is likely not an option now.
 

jms_embedded

Active member
  • Air Products San Fu, the Taiwan subsidiary of industrial gases company Air Products (NYSE:APD), is investing in two new air separation units as part of long-term deal with a major semiconductor manufacturer in Asia.
  • The company has agreed to supply ultra-high purity industrial gases to support the customer's new wafer fab expansion and existing fab capacity expansion in Tainan Science Park, Southern Taiwan.
  • It will invest ~$400M to build, own and operate a number of large air separation units to supply ultra-high purity nitrogen, oxygen, argon and hydrogen to the client.
Huh. No neon?
 

hist78

Well-known member

Huh. No neon?
This new plant is targeting those most used gas (in volume) that will be purchased by the new TSMC Kaohsiung fab. Also according to the official news release, the investment will be around $900 million, not $400 million as stated in the Seeking Alpha article.

 

benb

Active member
Summary of the neon crisis as of May 1, 2022: Cryoin and Ingas stopped production on March 11, 2022, in Mariupol and Odessa. I‘m noting the date since it seems 6 months is the typical inventory buffer, meaning September is when the real crisis begins. Mariupol is unlikely to produce neon soon due to the war, and Odessa is in the line of sight of the Russian advance, although unlike Mariupol it is not in Russian hands currently.

South China Morning News article indicates that the neon shortage may be good for China, implying China will fill the market void. Question: Does China have the purification facilities for semiconductor-grade neon?
5000% price increase reported on NPR:

 

benb

Active member
China producers filling the void in the neon market:


"At the same time, the Russian – Ukraine war and the subsequent sanctions against Russia by many countries have promoted the expansion and layout of many Chinese players. Since March this year, key Chinese suppliers released new production expansion and layout plans. These Chinese suppliers include Walter Electronics, Jinhong Gas, Kemet Gas, and Heyuan Gas."
 

tonyget

Active member

Korea’s Reliance on Chinese Semiconductor Raw Materials Surges

Korea’s dependence on China for major raw materials for semiconductors has soared over the past five years.

According to data released by the Ministry of Trade, Industry and Energy on Sept. 20, Korea's imports of silicon wafer, hydrogen fluoride, neon, krypton, and xenon from China surged between 2018 and July 2022.

Korea’s total imports of the five semiconductor raw materials stood at US$1,810.75 million in 2018, US$1,881.56 million in 2019, US$1.691.1 million in 2020, US$1,944.79 million in 2021 and US$1,550.17 million from January to July 2022.

During the same period, Korea’s imports of the five items from China ascended from US$139.81 million in 2018 to US$167.39 million in 2019 and US$184.79 million in 2021. This year, they stood at US$377.97 million in the January-July period, posting an increase of 170 percent from the total in 2018.

China's share of Korea's imports of the five items stood at 7.7 percent in 2018, 8.9 percent in 2019, 8.3 percent in 2020, and 9.5 percent in 2021 and 24.4 percent from January and July 2022. The percentage nearly tripled in five years.

In the case of silicon wafers, China share rose from 3 percent in 2018 to 6 percent in 2019, then 5 percent in 2020 and 6 percent last year, but then surged to 10 percent from January to July this year.

China’s share of Korea’s total hydrogen fluoride imports rose from 52 percent in 2018 and 51 percent in 2019 to 75 percent in 2020 after Japan’s curb on exports of the five to Korea. It rose to 70 percent in 2021 and 78 percent during the January-July period of this year.

Korea became more dependent on China for rare gases, such as neon, krypton, and xenon. Korea’s neon imports from China stood at only US$1.47 million in 2018, but ballooned about 100 times in five years to US$142.48 million from January through July 2022. Neon imports from China accounted for only 18 percent in 2018, but 84 percent in 2022.

Krypton imports from China surged about 300 times in five years, from US$60,000 in 2018 to US$20.39 million in the January-July period of 2022. China's proportion in Korea's total krypton imports also increased from 13 percent to 31 percent.

Korea’s xenon imports from China also swelled about 30 times from US$1.8 million to US$53.13 million, and China's share climbed from 5 percent to 37 percent.
 

Paul2

Active member
China producers filling the void in the neon market:


"At the same time, the Russian – Ukraine war and the subsequent sanctions against Russia by many countries have promoted the expansion and layout of many Chinese players. Since March this year, key Chinese suppliers released new production expansion and layout plans. These Chinese suppliers include Walter Electronics, Jinhong Gas, Kemet Gas, and Heyuan Gas."

These Chinese chem cos were just refining the raw neon from Russian, and Ukrainian sellers.

As far as I know, Chinese steel mills are huge, but they vent nitrogen after oxygen is extracted, since it's too cheap in China due to cheap electricity. They never had a commercial incentive to distil air past nitrogen.
 

Tanj

Active member
Neon separation could be done as an add-on to plants separating liquid nitrogen and oxygen. The largest such air separation units typically are used around old blast furnaces for steel, which is why steel plants in Ukraine and Russia, China, Korea are associated with this.

But there is also an interesting aspect that China seems to realize that having a grip on various key industrial processes is a strategic move, even if the business is not very profitable normally. They may have stumbled into this by their past paranoia and isolation, but by now have surely realized the geopolitical advantages it gives them. While the capitalist countries repeatedly do the analysis of ROI and decline to invest.
 

benb

Active member
Neon separation could be done as an add-on to plants separating liquid nitrogen and oxygen. The largest such air separation units typically are used around old blast furnaces for steel, which is why steel plants in Ukraine and Russia, China, Korea are associated with this.

But there is also an interesting aspect that China seems to realize that having a grip on various key industrial processes is a strategic move, even if the business is not very profitable normally. They may have stumbled into this by their past paranoia and isolation, but by now have surely realized the geopolitical advantages it gives them. While the capitalist countries repeatedly do the analysis of ROI and decline to invest.
Totally agree with your analysis of the situation, and would add a few things:
-5000% price increase should incentivize investment from Air Products, Air Liquide and Linde. Probably will, but they are slow.
-China (Walter Electronics) has been more nimble than the monopoly gas suppliers
-Walter obtained ASML certification. That was my question in March, it's been answered, affirmatively--China can produce top quality gas. Monopoly gas suppliers beware.
 

Paul2

Active member
Totally agree with your analysis of the situation, and would add a few things:
-5000% price increase should incentivize investment from Air Products, Air Liquide and Linde. Probably will, but they are slow.
-China (Walter Electronics) has been more nimble than the monopoly gas suppliers
-Walter obtained ASML certification. That was my question in March, it's been answered, affirmatively--China can produce top quality gas. Monopoly gas suppliers beware.

If electricity price is low enough, as it is in China, it becomes profitable to run standalone liquid nitrogen plants.
 
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