The Russian-Ukrainian war has made chip supply even worse? TSMC, Intel, and Samsung say

So far, big chip companies expect the crisis between Russia and Ukraine to have limited impact on their supply chains, thanks to their stockpiles of raw materials and diversified sourcing, but some in the industry are concerned about its long-term impact.

The crisis has hit shares of technology companies that source or sell products around the world on concerns that the Russia-Ukraine war will exacerbate a year-long shortage of semiconductor chips.

Limited direct impact

Ukraine supplies more than 90% of the semiconductor-grade neon gas that the U.S. uses to make chips. The inert gas is essential for lasers used in chip manufacturing. Neon is a byproduct of Russian steelmaking and is purified in Ukraine, according to market research firm Techcet. The U.S. currently gets 35% of its palladium from Russia, which is used primarily in sensor and memory manufacturing.

"Chipmakers haven't felt any direct impact, but companies that supply them with materials for making semiconductors buy gases such as neon and palladium from Russia and Ukraine. Supplies of these materials are already tight, so any further supply pressure could push up their prices, which in turn could lead to higher chip prices," said a person familiar with the Japanese chip industry.

But chip companies are better prepared for raw materials than in recent years because of other disruptions and conflicts, which has relieved them of some of the pain of chip shortages.The White House has warned the chip industry to diversify its supply chains in case Russia retaliates against threatened U.S. export restrictions by blocking access to key materials, people familiar with the matter said.

What do Intel, TSMC, and Samsung say?

ASML, a key Dutch supplier to chipmakers including TSMC, Samsung Electronics and Intel, said on Wednesday it was studying alternative sources of neon.

Lee Seok-hee, CEO of South Korean memory chip maker SK Hynix, told reporters last week that the company had "obtained a large amount" of chip materials and there was "no need to worry."

Samsung said the situation in Russia and Ukraine has no direct impact on chip production and is closely monitoring developments. Samsung said that thanks to its diversified material sources, production is proceeding as usual.

Intel said it does not expect any impact. GlobalFoundries, a foundry, said it does not expect direct risks from the war in Ukraine and that it has the flexibility to find resources outside of Russia or Ukraine. Taiwanese chipmaker UMC agreed.

TSMC, the world's largest chip foundry, declined to comment at this time. ASE, a Taiwanese chip testing and packaging company, said that the supply of materials remained stable at this time. Taiwan's Ministry of Economic Affairs said in a statement that they had checked Taiwan's semiconductor supply chain and found no direct impact on materials or production activities.

"Russia is not currently one of the main markets for Taiwan's chip foundry industry," said Joanne Chiao, senior analyst at market research firm TrendForce.

Unisem, a Malaysian chip packaging company whose clients include Apple, said it does not expect chip production to be affected from a raw materials perspective because the materials it needs do not come from Russia and its equipment mainly comes from the United States, Japan, South Korea, Singapore and locally. Unisem's customers include Apple.

Now, Malaysia has become an important link in the chip production chain, accounting for 13% of global chip assembly, testing and packaging.