The White House has warned the US chip industry to prepare for a Russian supply cut

2022-05-11 0 By

The White House has warned the US chip industry to diversify its supply chain in case Russia retaliates against us export controls threatening to block us access to key raw materials, Reuters said on Tuesday, citing people familiar with the matter.Earlier, the Biden administration threatened to impose sweeping export controls on Russia if it invaded Ukraine.According to Techcet, more than 90% of the U.S. supply of semiconductor-grade neon comes from Ukraine, while 35% of palladium comes from Russia.Reuters reported a screenshot , Reuters reported, according to people familiar with the members of the White House national security council (NSC) Peter harrell and staff members in recent days has been in contact with some members of the U.S. chip industry, to understand their situations involving chip manufacturing materials of Russia and Ukraine, and urged them to find other sources.”Part of that is working with companies to make sure they are prepared to deal with supply disruptions if Russia takes action to disrupt supply chains.””We understand that other sources for these key products are available and are ready to work with our (U.S.) companies to help them secure and diversify supplies,” the source said.The White House reportedly declined to comment on details of the talks, but a senior official declared that the administration was prepared if Russia invaded Ukraine.Earlier, the Biden administration threatened to impose sweeping export controls on Russia if it invaded Ukraine.Techcet, a U.S. market research firm, released a February 1 report highlighting the dependence of many semiconductor manufacturers on materials from Russia and Ukraine, such as neon, palladium and others.Neon, vital for semiconductor lasers, is a by-product of Russian steel manufacturing and is usually purified in Ukraine.Palladium is used in sensors and memory and as an electroplating material for some packaging technologies.Techcet estimates that more than 90% of the U.S. supply of semiconductor-grade neon comes from Ukraine, while 35% of palladium comes from Russia.Joe Passetti, vice president of global public policy and advocacy at SEMI, an international semiconductor industry association, sent an email to industry members this week assessing the supply risks of key raw materials for chip manufacturing, Visual China reported.”As discussed on today’s conference call, please check the attachment…About some semiconductor materials produced in Russia/Ukraine.”Passetti wrote, citing Techcet’s report on hexafluorbutadiene, palladium, scandium, helium and neon. “Please let us know immediately if any interruption in the supply of any of these materials would have an impact on your business.”Some chipmakers have been assessing the state of their supply chains and the potential impact of the Conflict between Russia and Ukraine, the report said.An anonymous source at a chip manufacturing company admitted that the company had been investigating supplies of neon and other gases, some of which came from Ukraine.”Even if there is a conflict in Ukraine, the supply of raw materials will not be cut off, but the price of materials will be pushed up.””The market will tighten and these gases will become very scarce, but it won’t shut down semiconductor manufacturing,” the person said.The unrest in Ukraine has led to higher prices for rare gases and could lead to supply problems, according to an executive at a start-up that designs power chips.Fluorine, another gas that has a large supply in the region, could also be affected, the executive said.Intel spokesman William Moss said the neon supply issue had no immediate impact on the company’s business.But the issue remains a concern as global chip supply remains tight and demand for chip orders is expected to pick up.Techcet estimates demand for all materials will increase by more than 37 per cent over the next four years, citing recent announcements by Intel, Samsung and TSMC in Ohio, Arizona and Texas.Neon prices rose 600 per cent before the 2014 conflict in Crimea, according to the US International Trade Commission (ITC), as the chip industry relied on supplies from a handful of Ukrainian companies.This article is an exclusive article, shall not be reproduced without authorization.