Chipmakers see limited impact for now as Russia invades Ukraine

Chips are pictured at the factory of semiconductor packaging company Unisem in Ipoh, Malaysia October 15, 2021. REUTERS/Lim Huey Teng

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TOKYO/TAIPEI, Feb 24 (Reuters) – Major chip companies said they expect limited supply chain disruption for now due to the Russia-Ukraine conflict, thanks to the stockpiling of materials raw materials and diverse supply, but some industry sources have said there could be a longer-term impact.

Europe faced one of its biggest security crises in decades, after Russia invaded Ukraine by land, air and sea. Read more

The crisis has hit stocks of tech companies that source or sell globally, fearing further supply chain disruptions after a year-long shortage of semiconductor chips.

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Ukraine supplies more than 90% of America’s semiconductor-grade neon, essential for lasers used in chip manufacturing. The gas, a by-product of Russian steelmaking, is purified in Ukraine, according to market research firm Techcet. Russia is the source of 35% of the palladium used in the United States. The metal is used in sensors and memory, among other applications.

“Chipmakers are not feeling any direct impact, but the companies that supply them with materials for making semiconductors are buying gases, including neon and palladium, from Russia and Ukraine,” a source said. Japanese chip industry source on condition of anonymity. “Availability of these materials is already limited, so any further pressure on supplies could drive up prices. This in turn could lead to higher chip prices.”

But businesses are better prepared than in recent years, thanks to other disruptions and conflicts.

“We understand that reports of a potential disruption in the supply of noble minerals and gases, due to ongoing tensions between Russia and Ukraine, are of concern to the semiconductor industry,” he said. said memory chip maker Micron Technology, but added that it had “a diverse supply” for its supplies.

The White House has asked the chip industry to diversify its suppliers in case Russia retaliates against US sanctions, which have so far targeted Russia’s Nord Stream 2 gas pipeline to Europe and some Russian banks. Further steps are expected. Read more

ALTERNATE SOURCES

ASML Holding (ASML.AS), a leading Dutch supplier to chipmakers including TSMC, Samsung Electronics (005930.KS) and Intel, said on Wednesday it was looking at alternative sources for neon. Read more

Most chipmakers said they were in wait-and-see mode ahead of Thursday’s escalation, having already diversified their supply chains due to the U.S.-China trade standoff, the pandemic and Japan’s diplomatic squabbles with South Korea.

Some companies began to diversify from Ukraine and Russia after Moscow’s annexation of Crimea in 2014 triggered a spike in neon prices.

The CEO of South Korean memory chipmaker SK Hynix (000660.KS), Lee Seok-hee, told reporters last week that the company had “secured a lot” of chip materials and that “there is no no need to worry.”

Intel Corp said it expects no impact. GlobalFoundries (GFS.O) said it did not expect direct risk and had the option of seeking sources outside of Russia or Ukraine, as did Taiwanese chipmaker United. Microelectronics Corp (2303.TW).

TSMC, the world’s largest contract chipmaker, declined to comment “at this time”, while Taiwanese chip testing and packaging company ASE Technology (3711.TW) said its material sourcing remained stable “at this stage”.

Taiwan’s Ministry of Economic Affairs told Reuters it had checked Taiwan’s semiconductor supply chain and found no direct impact on materials or production activities.

“Russia is not, at the moment, one of the main markets for the Taiwanese foundry industry,” said Joanne Chiao, senior analyst at TrendForce.

Malaysian chipmaker Unisem (UNSM.KL), whose customers include Apple (AAPL.O), said it expected no impact on chip production because the materials it needed did not come from of Russia and its machinery came mainly from the United States, Japan and Korea. , Singapore and locally.

Malaysia is a vital link in chip production, accounting for 13% of chip assembly testing and packaging globally.

Japan’s Ibiden (4062.T), which makes packaging substrates for chips, said it had enough materials, but sanctions could change that, when asked about neon supplies and other gases from Russia. “We are a bit worried,” a spokesperson said.

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Reporting by Tim Kelly in Tokyo and Ben Blanchard in Taipei; Additional reporting by Joyce Lee in Seoul, Yimou Lee and Sarah Wu in Taipei, Chavi Mehta in Bangalore and Liz Lee in Kuala Lumpur; Written by Sayantani Ghosh and Edmund Blair; Editing by Gerry Doyle

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