Global chip shortage expected to worsen due to lack of neon gas

Restrictions on Russian noble gas exports will increase pressure on supply chain, experts say

Russian government restrictions on exports of gases used in semiconductor production may exacerbate chip shortages on the world market and push prices higher, the Global Times reported this week, citing sources.

Xiang Ligang, director general of the Beijing-based Information Consumption Alliance, told the outlet that the restrictions could affect China's domestic semiconductor manufacturing. The country is the world's largest consumer of chips and relies heavily on imported chips.

According to Xiang, China imported around $300 billion worth of chips in 2021, used for the production of cars, smartphones, computers, televisions and other devices. He said sectors that rely heavily on imported chips may be hit more significantly, while the impact will be less noticeable in industries using chips that may be produced by Chinese companies such as SMIC.
Russia restricts export of critical gas for chip production

Last week, Russia imposed restrictions on noble gases in response to EU sanctions targeting technology exports to the country.

Noble or inert gases, such as neon, argon, xenon and others, are crucial in the semiconductor manufacturing process. Semiconductors are used to make the microchips needed for gadgets, cars, and home appliances.

There has been a global shortage of semiconductors since the start of the Covid pandemic, and the conflict in Ukraine has exacerbated the problem. Global prices for neon and xenon gases have risen since Ukrainian suppliers Ingas and Cryoin, which supply around 50% of the world's neon gas for semiconductor uses, halted production. Russia reportedly supplies up to 30% of the neon consumed globally. China and Japan are other big producers of noble gases, but their supplies are mostly consumed domestically.