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Russia-Ukraine war to cripple semiconductor industry globally

Daniel Nenni

Admin
Staff member
Just when we thought the supply semiconductor chain couldn't get worse:


The semiconductor shortage, that was expected to ease by mid-2022, is likely to get worse. As Russia and Ukraine are both suppliers of components used in semiconductor manufacturing, Russia attacking Ukraine will further stress the industry globally -- and fears are that it can result in manufacturing constraints leading to supply shortages and semiconductor price hikes.

“Just like Taiwan, both Ukraine and Russia also play a pivotal role in the global semiconductor supply chains. Ukraine is a significantly important source and supplier of raw materials, including, for instance, semiconductor-grade neon used in semiconductor manufacturing. Similarly, Russia is a key source of palladium used in many memory and sensor chips. In fact, it accounts for 45 per cent of the global supply. As such, the trickle-down effect of the war could potentially impact chip capacity and consequently, spike chip prices,” Prabhu Ram, Head - Industry Intelligence Group, CyberMedia Research told Business Today.

Semiconductors, that power everything electronic on earth and also in space, has a complex ecosystem of chip manufacturing. And chip manufacturing is a difficult and complex process. The global semiconductor industry is interdependent, and no nation in the world has managed to master the ecosystem as yet.

Industry experts explain, companies like Taiwan’s TSMC, China’s SMIC or South Korean Samsung Semiconductor Inc. are the contract chipmakers that share wafer specifications with fabless companies and IDMs, post which these companies send their design IPs to be printed on the wafers.

Wafers are then turned into semiconductors using high-precision processes and machinery sourced from companies such as Netherland-based ASML, Japan-based Tokyo Electron and Applied Materials of the US. When it comes to components, Russia is the leading producer of palladium. Palladium is essential for memory and sensor chips. It also produces several other key raw materials for computer chips, including the rare–earth metal, scandium.

On the other hand, Ukraine is a leading exporter of neon gas. It is a highly purified gas that is used for the most important process - etching circuit designs into silicon wafers to create chips.

Navkendar Singh, Research Director at IDC India told Business Today, “Russia and Ukraine are important in the supply chain of components for semiconductor manufacturing. They produce important gases and rare earth metals, which are used in the lithography.”

Using lithography, etching and deposition, layers after layers of transistors are laid out on the silicon, followed by an interconnected network of copper wires, which could involve anywhere over 300 to 700 steps.

Once these wafers are printed, the chips are shipped across testing facilities such as Amkor Technology Philippines, Inc. in the Philippines and Unisem Group in Malaysia for testing and packing.

Here chips on the wafer that are not functioning are discarded and the ones operational are further sorted, cut, and packaged. Post packaging, there is another round of testing, and the final chips are shipped back to the companies such as Intel, Micron, MediaTek, Saankhya Labs across the world, who then ship them to their clients (OEMs) who put them in the final product.

The industry that was worth about $440 billion in 2020, as per research firm Statista, is estimated to grow to about $550 billion this year, on its way to crossing $600 billion next year.

Dr Satya Gupta, President VLSI Society of India , Advisor, IESA, says, "Semiconductor Supply chain is a complex Eco-System involving companies from different countries and continents for raw material, equipment, wafer manufacturing, packaging, fabless companies, distributors and finally electronics products as customers. Any small disruption in any part of this supply chain creates a bubble in this complex supply-chain which affects everybody.
 
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Jumper

Member
This has been long coming and inevitable. Regime in Russia is inhumane and dangerous to basically any modern democracy in the world. We will have to find new sources of these materials or just find a new materials to work with.
 

Daniel Nenni

Admin
Staff member
This has been long coming and inevitable. Regime in Russia is inhumane and dangerous to basically any modern democracy in the world. We will have to find new sources of these materials or just find a new materials to work with.

Well, it just goes to point out how complicated the semiconductor ecosystem really is. Where else can we get semiconductor-grade neon and palladium besides Ukraine and Russia? Does our Government have an answer? Does anyone? Or will we go into another semiconductor crisis mode after the shortage strangles our semiconductor supply chain yet again?
 
P

Portland

Guest
There's still africa.

The thing about the war is Ukraine's anti tank weaponry is more advanced than Russian armor and semiconductors are a huge reason why. There's taiwan, if Ukraine can defeat Russia why can't Taiwan defeat China.
 

kornilev

New member
For it's size, Russia is extremely irrelevant to the Semiconductor industry. They have a low purchasing power, no companies worth mentioning in part of the ecosystem, and a political system not suited for long term projects. Find another raw material source and move on. There is always a source - for the right price.
 

SailorBob

New member
People thought highly interdependent economies would promote peace and stability, but it's just given non democratic countries leverage. Europe really can't sanction Russia in any significant way because they get 40% of their natural gas from Russia.
 

tooLongInEDA

Moderator
People thought highly interdependent economies would promote peace and stability, but it's just given non democratic countries leverage. Europe really can't sanction Russia in any significant way because they get 40% of their natural gas from Russia.
They could, but they won't. Yet another self-created European problem. Like the EU meddling in the Ukraine 12 years ago. So many of these unforced errors.

Fortunately, we still have the US defending us in Europe. They can't do it themselves. Or - once again - won't. Thank you to our friends in the US from here in the UK.
 
P

Portland

Guest
There's a lot of Russians that work in it, tech field, and Russians in general that don't like the bad press from this war.
 

Xebec

Active member
Well, it just goes to point out how complicated the semiconductor ecosystem really is. Where else can we get semiconductor-grade neon and palladium besides Ukraine and Russia? Does our Government have an answer? Does anyone? Or will we go into another semiconductor crisis mode after the shortage strangles our semiconductor supply chain yet again?
Fwiw - ASML sources 80% of it’s Neon outside of Russia and Ukraine today:
 

tooLongInEDA

Moderator

MZperX

New member
Well, Neon is the smaller problem on the long run. Neon is not mined, it is distilled from air. In can be done anywhere and the technology for it is not something super secret, it is just that Ukraine and Russia happened to go after this niche.
 

jms_embedded

Active member

On our news feeds and TV channels at the moment are many stories concerning the war in Ukraine, and among them is one which may have an effect on the high-tech industries. It seems that a significant percentage of the world’s neon gas is produced in Ukrainian factories, and there is concern among pundits and electronics manufacturers that a disruption of this supply could be a further problem for an industry already reeling from the COVID-related chip shortage. It’s thus worth taking a quick look at the neon business from an engineering perspective to perhaps make sense of some of those concerns.

As most readers will know from their high school chemistry lessons, neon is one of the so-called inert gasses, sitting in the column at the extreme right of the Periodic table. It occurs in nature as a small percentage of the air we breathe and is extracted from the air by fractional distillation of the liquid phase. The important point from the above sentences is that the same neon is all around us in the air as there is in Ukraine, in other words, there is no strategic neon mine in the Ukrainian countryside about to be overrun by the Russian invaders.

So why do we source so much neon from Ukraine, if we’re constantly breathing the stuff in and out everywhere else in the world? Since the air separation industry is alive and well worldwide for the production of liquid nitrogen and oxygen as well as the slightly more numerous inert gasses, we’re guessing that the answer lies in economics. It’s a bit harder to extract neon from air than it is argon because there is less of it in the air. Since it can be brought for a reasonable cost from the Ukrainians who have made it their business to extract it, there is little benefit in American or Western European companies trying to compete. Our take is that if the supply of Ukrainian neon is interrupted there may be a short period of neon scarcity. After that, air extraction companies will quite speedily install whatever extra plant they need in order to service the demand. If that’s your area of expertise, we’d love to hear from you in the comments.

Here at Hackaday we are saddened beyond words at what has happened in Ukraine, and we hope our Ukrainian readers and those Ukrainian hackers whose work we’ve featured make it through safely. We sincerely hope that this madness can be ended and that we can mention the country in the context of cool hacks again rather than war.

If you are interested in the strategic value of inert gasses, have a read about the global helium supply.

This part I find slightly odd, though;

It’s a bit harder to extract neon from air than it is argon because there is less of it in the air. Since it can be brought for a reasonable cost from the Ukrainians who have made it their business to extract it, there is little benefit in American or Western European companies trying to compete.

I mean, once you go through the trouble to liquefy air (which companies do for other reasons), what do you do with the remaining fractions such as neon if you don't distill them out to sell neon in the market? let the gas just go?

This article https://the-european-times.com/iceblick/ says that the Ukrainian company Iceblick manufactures 65% of the world's neon but 15% of the world's krypton and xenon.
 
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count

Well-known member
Inert gasses like neon are not typically distilled from air. The concentration of inert gasses in air is too low to make that economically viable. Most inert gasses are produced as a byproduct of conventional natural gas production, and usually extracted midstream at natural gas straddle plants.

In the US, where most natural gas production has shifted to unconventional (read fracking) production, there are less inert gasses produced.

Neon and other inert gasses are actually a huge long term problem. Helium concentration in air is only 5ppm. Helium concentration in some conventional natural gas fields can be has high as 3-5% (although 0.5% is more typical).

Note that Ukraine isn't distilling Neon from air. The natural gas transiting through Ukraine from Russia is high in Neon and Ukraine has made it their business to extract the Neon content from it to maximize their midstream revenue.
 

jms_embedded

Active member
Inert gasses like neon are not typically distilled from air. The concentration of inert gasses in air is too low to make that economically viable. Most inert gasses are produced as a byproduct of conventional natural gas production, and usually extracted midstream at natural gas straddle plants.

In the US, where most natural gas production has shifted to unconventional (read fracking) production, there are less inert gasses produced.

Neon and other inert gasses are actually a huge long term problem. Helium concentration in air is only 5ppm. Helium concentration in some conventional natural gas fields can be has high as 3-5% (although 0.5% is more typical).

Note that Ukraine isn't distilling Neon from air. The natural gas transiting through Ukraine from Russia is high in Neon and Ukraine has made it their business to extract the Neon content from it to maximize their midstream revenue.
I can believe that might be correct, but it conflicts with what's in Wikipedia:

Neon is produced from air in cryogenic air-separation plants. A gas-phase mixture mainly of nitrogen, neon, and helium is withdrawn from the main condenser at the top of the high-pressure air-separation column and fed to the bottom of a side column for rectification of the neon.[42] It can then be further purified from helium.

Ninety per cent of neon production is in Russia and Ukraine.[43] As of 2020, the company Iceblick, with plants in Odessa and Moscow, supplies 65 per cent of the world's production of neon, as well as 15% of the krypton and xenon.[44][45]
*Helium* on the other hand is produced from natural gas, but that's because it's created from alpha particles (helium nuclei) allegedly from radioactive decay:
All commercial production of helium comes from natural gas. There are two basic types of commercial helium deposits: natural gas produced primarily for the hydrocarbon content, typically containing less than 3 percent helium; and gas with little or no hydrocarbons, produced solely for the helium, which typically makes up between 5 and 10 percent of the gas. Although natural gas in which helium is only a byproduct contains a much lower percentage of helium, historically it has supplied the most helium.

Most geologists believe that the majority of helium in natural gas derives from radioactive decay of uranium and thorium, either from radioactive black shales, or granitoid basement rock. Granite and related rocks tend to contain more uranium and thorium than other rock types. However, some believe that the helium is largely primordial.

Unusual geological conditions are considered necessary for commercial concentrations of helium in natural gas. Helium accumulations are commonly in structural closures overlying bedrock highs. Faults, fractures, and igneous intrusives are regarded by some geologists as important pathways for helium to migrate upward into the sedimentary section. The atomic radius of helium is so small that shale, which is effective in trapping methane, allows the helium to migrate upward through the shale pores. Nonporous caprock such as halite (rock salt) or anhydrite is more effective in trapping helium. Helium deposits occur mostly in Paleozoic rocks.

High helium content of natural gas is accompanied by high contents of nitrogen and carbon dioxide. The percentage of nitrogen is usually 10 to 20 times that of helium, so that natural gas with 5 percent or more helium may have little or no methane. A representative sample from the Pinta Dome in Apache County, Arizona, for instance, has 8.3 percent helium, 89.9 percent nitrogen, 1 percent carbon dioxide, and only 0.1 percent methane. In such cases, the gas is produced solely for its helium content.[14]
 
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MZperX

New member
Inert gasses like neon are not typically distilled from air. The concentration of inert gasses in air is too low to make that economically viable. Most inert gasses are produced as a byproduct of conventional natural gas production, and usually extracted midstream at natural gas straddle plants.

In the US, where most natural gas production has shifted to unconventional (read fracking) production, there are less inert gasses produced.

Neon and other inert gasses are actually a huge long term problem. Helium concentration in air is only 5ppm. Helium concentration in some conventional natural gas fields can be has high as 3-5% (although 0.5% is more typical).

Note that Ukraine isn't distilling Neon from air. The natural gas transiting through Ukraine from Russia is high in Neon and Ukraine has made it their business to extract the Neon content from it to maximize their midstream revenue.
I am not sure that Ukraine can play around this way with the natural gas that is in transit. Both the Russians themselves and the buyers would be in a better position to do that.

Regardless, as far as I know neon is typically distilled from air. I know it is different for Helium. I have some friendly contacts to people who work for gas suppliers, I consider to ask a few questions.



I mean, once you go through the trouble to liquefy air (which companies do for other reasons), what do you do with the remaining fractions such as neon if you don't distill them out to sell neon in the market? let the gas just go?

The product of air liquification is usually not liquid air, but separated liquid nitrogen and liquid oxygen. There are two things to consider.
1. To liquify N2 and O2 you do not need the temperature that also liquify neon. Neon's boiling point at atmospheric pressure is 27.1°K, N2's is 77.4°K. So yes, normally a good part of Ne and especially He just goes away, because to liquify those you need better equipment, but that better and more expensive equipment is not needed for the primary goal.
2. In many usages both N2 and O2 can tolerate some noble gases in it, so there is often no need to separate the part of neon that still gets caught in the process (for example because it is dissolved in liquid nitrogen or oxygen). For example I saw in the plants of various automobile electronics suppliers how they flood the lines with nitrogen, especially for soldering. There is zero harm if there is some Ne in the N2 used for this, because it is also inert.
 

MZperX

New member
Well, Neon is the smaller problem on the long run. Neon is not mined, it is distilled from air. In can be done anywhere and the technology for it is not something super secret, it is just that Ukraine and Russia happened to go after this niche.
Just an additional thought. I said it can be done anywhere. I maintain that, but I can image it is easier to do it under a cold and dry climate. I do not actually know if neon production in Ukraine is seasonal or not, but I am pretty sure it is more energy efficient and less maintenance-demanding to operate such a plant in the Ukrainian winter than in Taiwan.
 

aaachipguy

New member
Neon and other inert gasses are actually a huge long term problem. Helium concentration in air is only 5ppm. Helium concentration in some conventional natural gas fields can be has high as 3-5% (although 0.5% is more typical).
Why neon and other inert gasses are a huge long term problem?
 
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