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Semiconductor industry: Neon gas supply disruption could impact semiconductor supply and demand

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The author is an analyst at NH Investment & Securities. He can be contacted at [email protected] — Ed.

Semicon’s supply and demand may be affected by interruptions in the production of gases such as neon and argon due to the conflict between Ukraine and Russia. Ukraine accounts for 70% of the world’s neon gas production.

Neon gas prices increased tenfold during the 2015 Ukraine war

The recent dispute between Ukraine and Russia could affect supply and demand for semiconductors. As a major producer of gases needed to manufacture semiconductors (eg neon, argon and krypton), Ukraine accounts for more than 70% of the world’s neon gas production. During the 2014-2015 war in Ukraine, the price of neon gas for semiconductor production increased more than tenfold to $3,500/m3.

We note that the excimer lasers used in ArF-Immersion equipment for semiconductor exposure processes are made possible by the mixture of specific gases such as neon, fluorine and argon, with neon accounting for more than 95% of these mixtures. During the 2015 conflict in Ukraine, excimer laser gas mixtures for semiconductor manufacturing traded at over US$25,000 per 50L, with their price rising more than 20 times from previous levels. Semicon exposure processes account for 70% of global neon demand.

The conflict between Ukraine and Russia could affect the supply of semiconductor materials

In 2015, when neon gas prices soared, the industry conducted research on methods to reduce neon gas usage. By adjusting the software logic and optimizing the purging process of the gas filling procedure, utilization can be reduced by 25-50%. Yet neon gas, etc., continues to play an important role in the production of semiconductors. Among the national players, DIG Airgas is a producer of neon gas.

Spot prices for memory semiconductors have continued to rise since the start of the year for NAND and from February for DRAM. And, the recent Kioxia plant accident has had an additional impact on NAND supply. As a result, Micron decided to raise NAND spot prices. In this context, disruptions in the production of materials due to international conflicts may have an additional impact on the supply and demand for memory semiconductors.