NEW DELHI: The ongoing geopolitical tension between Russia and Ukraine is going to enhance the semiconductor chips shortage problem globally, claims a report by Moody’s Analytics. As per the report, Russia supplies around 40% of the world’s supply of palladium and Ukraine produces 70% of the global supply of neon, and both are very vital items for preparing semiconductor chips.
“We can expect the global chip shortage to worsen should the military conflict persist,” said the report. The shortage is going to impact automakers, electronic device manufacturers, phone makers, and many other sectors that are increasingly reliant on chips, the report warns.
The report also highlighted that during the 2014-2015 war in Ukraine, the price of neon prices went up several times. With this, one could estimate how the scarcity of these items can impact the semiconductor supply. “Semiconductor-exposure companies make up 70% of total neon demand, as it is an integral part of the lithographic process for making chips,” reads the report.
It also mentioned that the most salient adverse impact will be felt in countries primarily in Europe that are recipients of Russian oil and natural gas. Russia accounts for 12% of the world’s oil supply and 17% of its natural gas. It supplies 5.2% of coal, 4.3% of copper, 6.1% each of aluminium and nickel, 15% of zinc, 9.5% of gold, 5.4% of silver, 14% of platinum, 44% of palladium and 11% of wheat.
The global supply of chips has been impacted due to Covid pandemic. If the tension doesn’t stop in the next few days, Moody’s Analytics expects the chip shortage to worsen. “This means significant risks are ahead for many automakers, electronic device manufacturers, phone makers, and many other sectors that are increasingly reliant on chips for their products to work.”