The price of high-quality neon gas has risen more than tenfold as Russia imposes a ban

by admin, Saturday, 11 June 2022 (2 months ago)

Recently, the Russian Ministry of Industry and Trade announced that it would limit the export of rare gases such as neon, krypton and foreign gas by the end of 2022. The export of these gases must be authorized by the Russian government. According to Russian media reports, Russia is going to impose sanctions for neon gas against “unfriendly” countries. Since the outbreak of the Russo-Ukrainian war, the prices of rare gases such as neon, krypton and xenon have risen sharply. In fact, the price of high quality neon has more than increased tenfold. Shares of A-share special idea general rose this Monday, with Huate Gas up nearly 15%. Shares of specialty gas suppliers such as Haohua Technology, Heyuan Gas and Jinhong Gas have risen.

Read also: Russia bans exports of inert gases such as neon and solar

neon gas

At the same time, the Russia-Ukraine war and subsequent sanctions against Russia by many countries have promoted the expansion and deployment of many Chinese players. As of March this year, major Chinese suppliers have published new plans to expand production and layout. These Chinese suppliers include Walter Electronics, Jinhong Gas, Kemet Gas and Heyuan Gas.

In the current global market for specialty electronic gases, industry leaders such as American Air Chemical Group, French Air Liquide Group, Japan Dayo Nippon Acid Co., Ltd. and American Linde Group hold more than 80% of the market share. Chinese players in the semiconductor gas supply chain are gradually expanding their market share. Expanded by lithographic gas, silane, arsenic and other components.

Ukrainian neon gas suppliers are part of the war – they can only cover half of world demand

Neon gas is a by-product of the refining of iron and steel and its main origin is in Ukraine and Russia. The Russian steel industry sends the neon gas produced to Ukraine for refining and other work. High purity rare gas mixed gas (krypton, neon, xenon, fluorine, etc.) can be used as lithography gas. This is a basic material in the lithographic process of semiconductor construction. In addition, these noble gases can also be used in other joints such as etching.

Ukraine’s main neon gas suppliers include Cryoin, Ingas and Iceblick. Their main production bases are located in Mariupol, Odessa and other places in Ukraine. In total, Ukraine supplies 70% of the world’s neon gas, 40% of krypton gas and 30% of foreign gas. In the Russia-Ukraine crisis, Mariupol and Odessa were the main targets for Russia.

After the outbreak of the Russia-Ukraine war, the production and sales of Ukrainian gas suppliers were greatly affected. The production bases of some companies even became the main battlefield of the war. Prior to the collision, Ingas produced 15,000 to 20,000 cubic meters of neon gas per month. According to Nikolay Avdzhy, Ingas’s chief commercial officer, Inga’s main customers are in South Korea, China, the United States and Germany. About 75% of neon gas is used in the chip industry.

Cryoin’s business development director Larissa Bondarenko said the company produces about 10,000 to 15,000 cubic meters of neon gas a month in Odessa, Ukraine. However, the company closed in February and work had to stop on February 24 to ensure employee safety.

Two Ukrainian companies supply more than 45% of world neon semiconductor gas

According to statistics, the two Ukrainian gas companies supply 45% – 54% of the world’s neon semiconductor gas. Some analysts say that if Ukrainian neon gas producers continue to shut down, the country’s neon gas production capacity will not exceed 270 tons in 2022. Although Ukraine’s neon gas supply capacity has been significantly reduced, the current shortage of neon gas and Rising costs do not yet have a significant impact on chip manufacturing. This is due to the fact that in 2015, there was a round of rare gases. Thus, there have been warnings for companies to be vigilant just in case.

As early as 2015, the conflict between Ukraine and Russia caused the price of neon gas to rise all the way. At that time, the price of neon gas increased by 600%. This has a greater impact on the semiconductor supply chain. After 2015, semiconductor companies generally took open source measures to limit the supply of neon gas. While reducing the amount of neon gas, they have switched to a differentiated supply model.

In terms of strangulation, Cymer and Gigaphoton, the two main suppliers of light sources for lithography machines, reduced their use of neon gas in a targeted manner after the increase in the price of neon gas in 2014 and 2015. They also developed neon gas recovery and recycling technology. , reducing neon consumption by 97%.

The Russia-Ukraine conflict has no short-term impact

As for open source, SK Hynix, Intel, ASML, TSMC, Micron and other semiconductor industry companies point out that they have multiple sources of neon gas supply. After the outbreak of the Russo-Ukrainian war, all these manufacturers claim to have had many stocks. They believe that the supply disruption in Ukraine and Russia will not affect their production in the short term.

However, some people in the industry have pointed out that the rare gas inventory of most companies is less than six months. If the Russia-Ukraine war goes on for too long, the shortage of neon gas will continue to damage chip supplies.

According to the Zheshang Capital Markets Research Report, on June 2, 2022, the purchase price of krypton in China reached 54,500 yuan / cubic meter. The market price of xenon is 543,000 yuan / cubic meter while the market price of neon is 18,000 yuan / cubic meter. Comparing these prices with pre-war, there is an increase. The price of Xenon gas has increased 2-3 times. The price of neon before the war is only about 1500 / cubic meter.

Conclusion: countries compete for semiconductors

The Russia-Ukraine conflict affects the entire technology industry. The United States, Europe, and other countries and regions have used their chip-design advantages to impose sanctions on Russia’s semiconductor and technology industries. Russia has used its supply advantages, such as rare gases, to deal with it, thus affecting the entire semiconductor supply chain.

For China’s semiconductor supply chain, independence and security remain key to growth. This shortage of neon gas could be an opportunity for Chinese specialty gas suppliers to speed up their entry into the fab production line.

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