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      How do Ukraine-Russia Crisis Impact on Chips

      Large chip companies so far predict limited supply chain disruption from the Russia-Ukraine crisis, due to raw material stockpiling and diversified procurement, but some industry sources worry about the longer-term impact.

      One of the worst security crises in Europe in decades is unfolding, with Russian President Vladimir Putin authorising a military operation in eastern Ukraine in what appear to be the start of a war.

      The crisis has hit stocks of tech companies that source or sell globally on fears of further disruptions on the back of a yearlong shortage of semiconductor chips.

      Ukraine supplies more than 90% of US semiconductor-grade neon, critical for lasers use in chipmaking.

      The gas, a biproduct of Russian steel manufacturing, according to market research firm Techcet, is purified in Ukraine.

      35% of US palladium, use in sensors and memory, among many other applications, is source from Russia.

      The White House has warn the chip industry to diversify its supply chain in case Russia retaliates against threatened US export curbs by blocking access to key materials.

      The West sanction Russia’s Nord Stream 2 pipeline and some Russian banks, and impose curbs on a number of senior Russian officials.

      More sanctions could come in the form of Cold War-like curbs on technology, follow by Russian retaliation on exports.

      ASML Holding, a key Dutch supplier to chipmakers including TSMC, Samsung Electronics, and Intel, said it is examining alternative sources for neon.

      Most chipmakers are in wait-and-watch mode and in communication before escalation project confidence about their supply chains, which they have diversified in the wake of the US-China trade standoff, the pandemic and Japan’s diplomatic spat with Seoul.

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      Some companies had start diversifying away from Russian and Ukraine after Moscow annexed Crimea in 2014, which trigger a huge increase in neon prices.

      South Korean memory chipmaker SK Hynix CEO Lee Seok-hee told reporters last week that the company had “secured a lot” of chip materials, and that “there’s no need to worry”.

      Intel said it does not anticipate any impact.

      GlobalFoundries said it does not anticipate a direct risk and has flexibility to seek sources outside Russia or Ukraine, as did Taiwan chipmaker United Microelectronics Corp.

      TSMC, the world’s largest contract chipmaker declined to comment “at the moment”.

      Taiwanese chip testing and packaging firm ASE Technology said its material supply remains stable “at this point”.

      Malaysian chipmaker Unisem, whose customers include Apple, said it expects no impact on chip production from a raw materials perspective because the materials it needs are not source from Russia, and its machines are mainly from the United States, Japan, Korea, Singapore, and locally.

      Malaysia has emerge as an important link in the chip production chain, and accounts for 13% of global chip assembly testing and packaging.

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