The war between Russia and Ukraine has deepened the shortage of semiconductors, a sector already hit by the Covid-19 pandemic, with supply chain disruptions, high production costs and new tensions in delivery logistics.
Such snags led shares of major publicly traded microprocessor and semiconductor manufacturers to fall sharply on the stock market. However, the progress in the peace talks and the calm among investors has returned air to the shares of the companies in the sector.
The biggest fall is for Taiwan Semiconductor (TSMC), whose papers have lost 8.12% since February 24, when the war began.
Indeed, Taiwan’s Ministry of Economy, home to the world’s largest contract chipmaker TSMC, said Taiwanese companies had already made advanced preparations and had “safety stocks” of neon, so it saw no problem. in the short-term supply chain.
The American Micron, reports a loss of 7.78%, while Qualcomm, also from the United States, falls 5.44% on Wall Street since the beginning of the invasion.
Qualcomm stopped selling its semiconductors to Russian companies in compliance with Western sanctions. Among these are the ban on exporting chips to Russia, which is already being applied by Intel and AMD.
Although Intel shares were volatile at the beginning of the conflict, without a clear direction, US control has given it stability and since February 24 they have risen 5.58% to 47.14 dollars.
According to Reuters, the president of the Semiconductor Industry Association, John Neuffer, stated that “the United States semiconductor industry is committed to complying with the export control rules announced in response to the deeply disturbing events that are developed in Ukraine”.
However, he acknowledged that the impact of the restrictions on sales to Russia is not yet clear, since that European country is not a significant direct consumer of semiconductors, with only 0.1% of total chip purchases.
James Salazar, deputy director of Economic Analysis at CIBanco, explained that “although the main semiconductor producing companies are not in the region of the conflict, since they are in Taiwan, South Korea and the United States, there are raw materials that are used for their production. manufacture, such as neon and nickel.
“The problem of semiconductor shortages will continue to deepen, in terms of bottlenecks for deliveries for production compliance. It is going to be a situation that will continue to permeate as long as the geopolitical conflict lasts, ”he added.
Between 45 and 54% of the world’s semiconductor-grade neon, critical for lasers used in chip manufacturing, comes from two Ukrainian companies, Ingas and Cryoin. Global consumption of neon for chip production reached some 540 metric tons last year, according to estimates by market research firm Techcet.
Before Russia’s invasion of Ukraine, Ingas produced between 15,000 and 20,000 cubic meters of neon per month for customers in Taiwan, Korea, China, the United States and Germany, of which about 75% went to the chip industry. Nikolay Avdzhy, the company’s chief commercial officer, said in an email to Reuters.
Cryoin, which produced approximately 10,000 to 15,000 cubic meters of neon per month and is located in Odessa, stopped operations on February 24 when the invasion began, to maintain the safety of its employees, according to business development director Larissa. Bondarenko.
Other semiconductor producers that have also been affected are the Taiwanese SK Hynix, as well as the Korean Samsung Electronics.
In fact, the latter suspended its shipments to Russia. Samsung is the largest semiconductor manufacturer and leader in smartphone sales in that country. It controls just over 30% of the market for such phones in Russia, according to Bloomberg, which represents 4% of total profits in that area for the South Korean giant.
Samsung shares have fallen 9.07% this year, and since the beginning of the conflict, they have already lost 2.47%, although it lost more than 10 percent.
of the most affected sectors
Amin Vera, Deputy Director of Economic Analysis at Black Wallstreet Capital, explained that “the risk of war in Ukraine is much greater for the microprocessor sector than for any other, except oil. China and Taiwan are the semiconductor hubs, and if the tension in Russia escalates, these two nations could also take advantage of the situation to extend their territory”.
James Salazar commented that “the situation was improving regarding the damage to the supply chain that was caused by the Covid-19 pandemic. We were not in the best point but this conflict puts a brake on this recovery, although it will not be as robust a deterioration as with the pandemic.
The CIBanco expert explained that “the automotive sector will be the one that will continue to be strongly impacted by this shortage of semiconductors in the world, but also the technology sector. However, the latter managed to acquire a very strong inventory and for this reason it has been able to solve the current crisis”. (With information from Reuters)