Chip firms ready for immediate disruption from Ukraine

Chip firms ready for immediate disruption from Ukraine

Leading chip manufacturers said they are prepared for any immediate disruption caused by the Russia-Ukraine conflict to the supply of materials used in the microprocessors that power cars, smartphones and computers.

The United States is heavily dependent on the two countries for materials such as palladium and neon. Techcet, a supply chain research company that advises the world s largest semiconductor manufacturers and suppliers, said that Russia accounted for 35 per cent of the palladium imported to America, while Ukraine supplied the majority of neon consumed in the US chip manufacturing sector.

Chip producers said they were better prepared for supply chain disruption than they had been in previous years thanks to stockpiling and diversifying their supply sources. Micron Technology, an American maker of memory chips, said it had diversified sourcing Unisem, a Malaysian manufacturer whose customers include Apple, which said it expected no impact on production because the materials it needed were not sourced from Russia.

GlobalFoundries, the California-based manufacturer, and United Microelectronics, a Taiwan chip-maker, said they did not expect direct risk and had the flexibility to seek sources outside Russia or Ukraine.

Lita Shon-Roy, president of Techcet, said she would not be surprised to hear of a lot of complaints over the next few weeks because of the current strain on the supply chain. She said that if the war goes on, it creates problems for the supply chain, because resources typically used in the steel industry to produce neon are diverted to war production. The closure of borders could prevent exports.

Daniel Ives, an analyst at Wedbush Securities, said supply chain issues were a concern for technology companies, but many saw this coming and have diversified their portfolios, according to Daniel Ives, an analyst at Wedbush Securities.