"No Disruption in Semiconductor Production Even if Ukraine's Gas Supply is Cut Off (Comprehensive)"

Minimal Possibility of Semiconductor Production Halt Despite Russia-Ukraine Tensions
Production Costs May Increase

[Asia Economy Reporter Park Sun-mi] Although tensions between Russia and Ukraine may lead to increased semiconductor production costs, it is expected that these tensions will not result in disruptions to semiconductor production.

On the 16th, market research firm TrendForce dismissed concerns that the tension between Russia and Ukraine could cause supply disruptions of essential raw material gases such as neon, krypton, argon, and xenon, which are critical for semiconductor production, potentially leading to production setbacks. While Ukraine currently accounts for about 70% of the world's neon supply, there is sufficient alternative supply available.

TrendForce stated, "Although the conflict between Russia and Ukraine could affect the supply of inert gases necessary for semiconductor production, semiconductor factories and gas suppliers have already stockpiled adequate quantities, and alternative supplies can be sourced from other regions to replace Ukraine." They added, "Supply disruptions of Ukrainian gas will not halt semiconductor production lines. However, a reduction in gas supply could lead to price increases, which may raise wafer production costs."

Korean semiconductor companies, including Samsung Electronics, are also preparing for potential impacts on semiconductor material supply chains due to changes in the Russia-Ukraine situation, but they have already established response systems and do not anticipate production disruptions. Although there is a high dependency on Ukrainian inert gases, they have prepared response measures through diversification of trading partners.

Lee Seok-hee, CEO of SK Hynix, stated before the 'Semiconductor Investment Activation Meeting' hosted by the Ministry of Trade, Industry and Energy that the impact of the Ukraine situation is minimal. Regarding concerns about raw material supply, Lee said, "There is no need to worry. We have prepared extensively and secured a large inventory of raw materials."

Another industry official said, "In 2019, when Japan tightened export regulations on key semiconductor materials to Korea, the semiconductor industry experienced a supply shortage once, and recently, the entire industrial sector faced aftershocks from the urea solution shortage. Therefore, the semiconductor industry has long been preparing to diversify supply chains," adding, "There is no significant immediate impact."

Meanwhile, KOTRA has expanded its Ukraine emergency response team and raised its response level. It plans to intensively manage supply chains for key items supplied by Ukraine and Russia. It also plans to manage supply chains for items where Russia and Ukraine hold a significant share in the global raw materials market and those that constitute a large portion of Korea's imports, and to seek alternative supply sources if necessary.

This content was produced with the assistance of AI translation services.