"3 Months of South Korea Semiconductor Raw Material Inventory"... Supply Crisis Feared Amid Price Surge

Price Surge and Supply Disruption Concerns as Orders Flood Alternative Regions Including China

[Asia Economy Reporter Park Sun-mi] Due to Russia's invasion of Ukraine, South Korea's semiconductor industry is facing increasing cost burdens and supply disruption concerns as prices of key materials necessary for production surge. Although stocks of rare gases such as neon, krypton, and xenon from Russia and Ukraine have been secured for about three months, red flags have been raised in material procurement, making it difficult to secure alternative supplies.

According to the semiconductor industry on the 2nd, Samsung Electronics and SK Hynix have secured alternative import sources in advance, so even if there is a disruption in the supply of semiconductor materials from Russia and Ukraine, they believe they can endure for about three months.

However, as transactions concentrate on alternative import sources, semiconductor material prices are soaring, and if the Ukraine crisis prolongs, securing necessary materials is expected to become even more difficult. According to major foreign media, Ukrainian rare gas suppliers have become unreachable due to the war situation, making additional orders nearly impossible.

A company producing gases necessary for semiconductor production in China said, "Since the Ukraine crisis, inquiries for gas orders from outside China have surged 5 to 6 times," adding, "We receive dozens of new order inquiries daily, but production is reaching its limit." In fact, the price of neon gas supplied from China has exceeded 1,650 yuan (about $261.5) per cubic meter, rising 65% compared to the beginning of the year and about four times higher than the low point in October last year.

An official from the Korean semiconductor industry said, "For now, there is no disruption in semiconductor production, but as semiconductor material prices rise and transactions concentrate on alternative import sources, if the Ukraine crisis continues, damage is inevitable," adding, "The global semiconductor shortage situation could worsen, which may lead to further increases in semiconductor prices." Global credit rating agency Moody's also assessed the impact on the Korean semiconductor industry, stating, "If the Russia-Ukraine crisis prolongs, damage is inevitable," and "Semiconductor prices will rise and lead times (the time from customer order to delivery) will inevitably lengthen."

Disruptions in semiconductor production are poised to fuel the global semiconductor supply shortage. Hyundai Motor has decided to suspend operations at its Russian plant for five days due to semiconductor shortages. US media CNBC expressed concern, stating, "The semiconductor industry is underestimating the current crisis, but as the White House has warned about supply chain issues in the semiconductor industry, semiconductor shortages will cause a chain reaction of cost increases and production disruptions across various industries such as automobiles, electronics, and smartphones."

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