Chip producers diversify supply chains to avoid higher prices

Chip producers diversify supply chains to avoid higher prices

Washington, 3/2/2022

Chip makers are reportedly diversifying their suppliers to forestall potential supply chain disruptions resulting from Russia’s attacks on Ukraine. The conflict could affect supplies of noble gases and the metal palladium, all of which are used in chip manufacturing, leading to higher chip prices in the future.

Ukraine supplies more than 90% of the neon gas that powers the lasers used in chip manufacturing. The neon is a byproduct of Russian steel production, but is purified in Ukraine. Similarly, 35% of the U.S. palladium used in the chips‘ sensors and memories comes from Russia. Major chipmakers say diversifying sources and stockpiling materials will minimize supply chain problems for now.

Earlier in February, the White House had urged the chip industry to diversify and find alternative sources of supply in case Russia blocks access to materials in retaliation for U.S. sanctions.