Despite the Russia-Ukraine Conflict, the Impact on Korean Semiconductors is 'Minimal'

Sufficient Response Possible Through Import Diversification and Localization
Government Also Judges Low Concern Over Rare Gas Supply Shortage
Gas Stock 3-4 Times Higher Than Usual...Industry Says "No Major Impact"

[Image source=Yonhap News]

[Asia Economy Reporter Jin-ho Kim] Despite Russia's full-scale invasion of Ukraine, the impact on South Korea's semiconductor industry is expected to be minimal. Although rare gases essential for semiconductor manufacturing processes are largely imported from the two countries, the industry had proactively increased inventory before the crisis and has a structure capable of sufficient response through localization.

According to the industry on the 6th, last year South Korea imported about half of the rare gases essential for semiconductor production, such as neon, krypton, and xenon (kseunon), from Ukraine and Russia.

Neon is mainly used in the photolithography process that engraves fine circuits on semiconductor wafers. Krypton and xenon are used in the etching process that removes parts of the semiconductor circuit pattern.

Specifically, Ukrainian and Russian sources accounted for 28% of neon imports (Ukraine 23%, Russia 5%). Krypton also reached a total of 48%, with Ukraine at 31% and Russia at 17%. Xenon imports from these countries accounted for 49%.

Accordingly, following Russia's full-scale invasion of Ukraine, concerns have spread that South Korea's semiconductor industry might be hit. There are worries that difficulties in securing rare gases could disrupt semiconductor production.

However, semiconductor companies such as Samsung Electronics and SK Hynix expect these concerns to be unfounded. They explain that there was sufficient response due to a "learning effect," as rare gas prices surged during Russia's 2014 invasion of Ukraine's Crimea Peninsula.

In particular, it is reported that import diversification and localization have been steadily promoted even before this crisis, so the supply and demand are not significantly affected.

An industry official said, "Raw materials have been continuously diversified in imports, and inventory levels are safe, so we believe there will be little impact from the Ukraine situation," adding, "Some rare gases can also be produced domestically."

Another industry official said, "Domestic semiconductor companies have been well prepared for supply chain issues since Japan's semiconductor export restrictions," adding, "Even if imports from Ukraine are blocked, it will not significantly affect semiconductor production at factories."

Meanwhile, according to the government, stockpiles of Ukrainian rare gases for semiconductors are secured for more than three months. The Ministry of Industry judged that the impact on supply and demand is limited as the industry has already taken preemptive measures such as expanding inventory for rare gases mainly imported from Ukraine, including neon, krypton, and kseunon.

Moon Seung-wook, Minister of Trade, Industry and Energy, stated, "The Russia-Ukraine situation has little impact on the supply of rare gases like neon," and evaluated, "Domestic companies have increased their stockpiles of these gases to three to four times the usual amount and have alternative supply sources."

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