Russia-Ukraine Conflict Could Worsen Global Chip Shortage, Says Report
Even though there have been improvements in technologies and more and more companies have stockpiled resources due to elevated demands post-pandemic, it is only limited till the inventory lasts.
The conflict between Russia and Ukraine could worsen the global semiconductor shortage, according to a report by Moody¡¯s Analytics.
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As per the report, palladium and neon are two resources that are key to the production of semiconductor chips. Russia provides 40 percent of the world¡¯s palladium supplies whereas Ukraine produces 70 percent of the global supply of neon as it is an important part of the lithographic process.
The 2014-2015 war in Ukraine already showed considerable ups in neon prices, indicating how sensitive the semiconductor industry is.
Even though there have been improvements in technologies and more and more companies have stockpiled resources due to elevated demands post-pandemic, it is only limited till the inventory lasts.
As of now, there is no major impact. But if situations don¡¯t come in control soon, chipmakers in Taiwan, South Korea, Japan, China and other nations will feel the impact. This will likely result in higher chip prices and longer lead times going forward.
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The report warns that in case a deal is not negotiated in the coming months, the chip shortage is expected to only get worse and for industries highly dependent on them to be similarly affected.
It has the potential to extend the stress in the supply chain of semiconductors in the Asia-Pacific region and could affect the production of automobiles, tech devices like laptops, smartphones and other electronic equipment.
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