There are two Ukrainian companies named Ingas and Cryoin that have stopped their operations due to the ongoing Russian invasion of Ukraine. As a result, the global supply of chips can be increasingly disrupted and the price will be more expensive. How come?
Ingas and Cryoin are two companies that supply one of the main materials for chip making, namely neon gas. No kidding, the supply of neon from these two companies when combined reaches half of the global supply of neon.
The neon produced by Ingas and Cryoin is essential for the lasers used in the chip manufacturing process. Around 45% to 54% of the supply from these two fills the global neon market, which reached 540 metric tons in 2021.
Both Ingas and Cryoin have stopped their operations, according to their spokesmen, as Russia continues to escalate its attacks on Ukrainian cities, killing civilians and damaging critical infrastructure.
The cessation of the operations of these two companies will add to the problem of global chip supply, which is currently still experiencing shortages due to the pandemic.
Fortunately, however, CFRA analyst Angelo Zino estimates that supply of neon at a number of chipmakers is still sufficient for now. But that could change if the conflict between Russia and Ukraine does not end.
"If the stockpile runs out by April and chipmakers don't get shipments from other countries in the world, this means it will hamper the supply chain," he said.
Prior to the Russian invasion of Ukraine, Ingas produced neon as much as 15 thousand to 20 thousand cubic meters per month for its consumers in Taiwan, Korea, China, the US, and Germany. 75% of the supply is directed to the chip industry, said CCO Ingas Nikolay Avdzhy.
Ingas is a Mariupol-based company, which has recently become a target for Russian operations in Ukraine. On Wednesday, Russian troops destroyed a maternity hospital in Mariupol, an act that Ukraine and other Western countries have called a war crime.
Meanwhile, Cryoin, which produces 10 thousand to 15 thousand cubic meters of neon every month, is a company located in Odessa. They had already stopped operations on February 24 last, just when Russia began to invade Ukraine.
Business Development Director Larissa Bondarenko said they would not be able to fulfill their order of 13,000 cubic meters of neon for March if the attacks continued.
Bondarenko also said they would find it difficult to operate again if their equipment was damaged in an attack. He was not sure that Cryoin could get the material supply needed to produce neon.