The besieged country is one of the leading suppliers of the gas, which is used to make semiconductor chips.
Many have been closely following Russia’s invasion of Ukraine. The fighting may feel far away, but the consequences could soon hit close to home. Take, for example, the war’s impact on the global supply chain, an already fragile system that could be further stressed if Ukraine—one of the world’s largest producers of neon—continues to bear the brunt of Russia’s aggression.
We know neon for its use in the bright, twinkling signs that light up the Las Vegas Strip or New York’s Times Square, but this colorless, odorless gas has value for many other reasons. It’s critical in the production of semiconductor chips, for instance, which can be found in everything from cellphones to cars.
Roughly 85 percent of the semiconductor chips made today use neon gas, Angelo Zino, a senior industry analyst at CFRA, tells Popular Mechanics. The gas, which is a byproduct of steel production, is used in a process called lithography. “Lithography is the step in the chip-making process that prints the tiny patterns on the actual silicon wafers,” Zino says. Neon acts as a buffer that guides the ultraviolet lasers etching pathways onto the chips.
About a third of those chips are used for computing, both in personal computers and in data centers. A third of the market is driven by the wireless space, Zino says. This includes our cellphones and other mobile devices as well as the back-end infrastructure connecting them.
And then there are the consumer products—cars, microwaves, and toys, for instance—and the factory robots that construct them. This area of the market, he explains, is the fastest growing and, subsequently, most supply-constrained.
Russia’s invasion of Ukraine, where almost half of the world’s neon supply is processed, has further stressed a global supply chain already weakened by the ongoing pandemic. The two largest processors of Ukrainian neon, Ingas and Cryoin, which are based in the besieged cities of Mariupol and Odessa, respectively, have halted production, according to a March 13 report by Reuters.
If Russia’s deadly invasion of Ukraine continues, it could pose a significant problem for the world’s semiconductor chipmakers. Major chip manufacturers, such as Intel, Samsung, and Taiwan Semiconductor, who claim to have robust stockpiles of neon that could potentially last months, can more easily pivot to other suppliers. But smaller chipmakers that have not established alternative suppliers could be hamstrung by rapidly increasing prices and may soon feel the crunch.
And this is the slow season. As we creep closer to the holidays, Zino says consumers could start to feel that crunch, too.