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Global Commodity Intelligence

Q2 2025 | APRIL - JUNE

Russia-Ukraine Conflict Raises Semiconductor Supply Chain Concerns

February 28, 2022

The ongoing conflict between Russia and Ukraine has fueled additional concerns that supply disruption could exacerbate the ongoing global Semiconductor chip shortage. Russia and Ukraine are key sources of raw materials such as noble gases and precious metals used in semiconductor manufacturing.

However, large chip companies have indicated they expect limited supply chain disruption in the near term due to an average of 6 to 12 months of raw material stockpile and a diversified procurement strategy. The longer-term impact will be dependent on the extent of the conflict, but most chip companies have started actively diversifying sources of these raw materials.

Ukraine and Russia are important sources of noble gases and precious metals used in chipmaking. These include neon, argon, xenon, krypton from Ukraine, hexafluorobutadiene (C4F6), and palladium from Russia. Ukraine, for example, controls 70% of the world’s supply of neon, according to research company TrendForce.

A handful of gas suppliers, such as Air Products and Linde of the US and Air Liquide of France, buys inert gases purify and liquefy them before supplying them to global chipmakers such as; Intel, TSMC, Samsung, along with many other chipmakers. Major chipmakers in the industry carry 6 to 12 months inventory of these critical gasses and have developed alternative supply sources for all the related materials following disruptions from previous crises.

Noble Gases - Neon Gas
The most important use for neon is in ultraviolet (UV) lasers. This laser is essential for making clean and precise cuts in the range of hundreds of nanometers. It is used in Semiconductor Lithography – a critical step in Semiconductor manufacturing to transfer complex circuitry designs onto a Silicon wafer. 90% of US Semiconductor grade Neon gas comes from Ukraine.

Metals - Palladium
Russia and Ukraine lead the global production of nickel, copper, and iron. They are also largely involved in exporting and manufacturing other essential raw materials like platinum and palladium. Palladium is used in Sensors and Memory ICs, among other applications. Russia accounts for 35% of Palladium used in the United States.

Limited Short-Term Impact to Jabil
Key chip suppliers we surveyed in the past week do not expect any short-term supply chain impact as these raw materials are well inventoried at the supplier or have exposure to the region that can be diversified.

While the risk of near-term supply disruption is low, the upward pressure on cost around sourcing these raw materials may start getting priced into future contract price negotiations.The longer-term risk would be dependent on the duration and extent of the conflict. Jabil will continue to work closely with our supply base to monitor and determine any potential risks.

Today, immediate supply chain bottlenecks for the Semiconductor industry remain on wafers, leadframes, and manufacturing capacity. Therefore, we recommend a call to action consistent with how we have been navigating the ongoing Semiconductor shortage:

Planning and providing orders/forecasts to suppliers based on lead times.
Maintain consistency of the demand. Pushing out or canceling orders only when the position in the queue is not needed.
Actively diversifying and adding alternate sources that are willing and able to support nearer-term.
Adhere to the escalation process with a focus on components gating clear-to-build.

Please do not hesitate to contact me directly with any questions (chris_goh@jabil.com).

Chris Goh, Director Global Commodity Management