Ukraine is a major supplier of raw material gases for semiconductors including neon, argon, krypton, and xenon, according to TrendForce’s investigations. Ukraine supplies nearly 70% of the world’s neon gas capacity. Although the proportion of neon gas used in semiconductor processes is not as high as in other industries, it is still a necessary resource. If the supply of materials is cut off, there will be an impact on the industry. TrendForce believes that, although the Ukrainian-Russian conflict may affect the supply of inert gas regionally, semiconductor factories and gas suppliers are stocked and there are still supplies from other regions. Thus, gas production line interruptions in Ukraine will not halt semiconductor production lines in the short term. However, the reduction in gas supply will likely lead to higher prices which may increase the cost of wafer production.

Inert gases are primarily used in semiconductor lithography processes. When the circuit feature size is reduced to below 220nm, it begins to enter the territory of DUV (deep ultraviolet) light source excimer lasers. The wavelength of the DUV light generated by the energy beam advances circuit feature sizes to below 180nm. The inert gas mixture required in the DUV excimer laser contains neon gas. Neon gas is indispensable in this mixture and, thus, difficult to replace. The semiconductor lithography process that requires neon gas is primarily DUV exposure, and encompasses 8-inch wafer 180nm to 12-inch wafer 1Xnm nodes.

TrendForce research shows, in terms of foundries, global production capacity at the 180~1Xnm nodes accounts for approximately 75% of total capacity. Except for TSMC and Samsung, who provide advanced EUV processes, for most fabs, the proportion of revenue attributed to the 180~1Xnm nodes exceeds 90%. In addition, the manufacturing processes of components in extreme short supply since 2020, including PMIC, Wi-Fi, RFIC, and MCU all fall within the 180~1Xnm node range. In terms of DRAM, in addition to Micron, Korean manufacturers are gradually increasing the proportion of 1alpha nm nodes (using the EUV process) but more than 90% of production capacity still employs the DUV process.  In addition, all NAND Flash capacity utilizes DUV lithography technology.

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As of February 8, 2022, it has been 3 months since Russia began amassing troops on its border with Ukraine and tensions have yet to ease. Since Ukraine is a major producer of gases required for semiconductor manufacturing, once the two sides go to war, some gases may be in short supply.

Ukraine primarily produces neon, krypton, and xenon, which are key materials for exposure and etching processes

According to TrendForce research, Ukraine supplies approximately 70% of the world’s neon gas. In the semiconductor manufacturing process, neon gas can be used in KrF lasers utilized during exposure. In addition to neon gas, Ukraine also supplies approximately 40% of the world’s krypton gas. Krypton gas is also used in KrF lasers and both neon and krypton gas are closely tied to the exposure process. Furthermore, Ukraine produces xenon which can be used in semiconductor etching processes, accounting for approximately 30% of the world’s supply. Since Ukraine is a major supplier in the neon, krypton, and xenon markets, if a war breaks out, shortages of neon, krypton, and xenon are likely to follow. Even if the market is quick to find new gas suppliers or expand gas production capacity, product certification will take several months or even more than half a year, plunging the supply of electronic gas required for semiconductor manufacturing processes into scarcity.

A shortage of neon and krypton due to the war will affect the shipment of mature process products

TrendForce indicates, the large supply of neon and krypton in Ukraine is primarily used in KrF lasers and KrF lasers are utilized in mature 8-inch wafer 250-130nm nodes. At present, products manufactured at the 250-130nm nodes include power management chips (PMIC), micro-electromechanical systems (MEMS), and power semiconductor components such as MOSFET components and IGBTs. Once Ukraine and Russia go to war and the war expands into a stalemate, the shortage of neon and krypton will affect shipments of the aforementioned products to varying degrees. From the perspective of end-user products, the automotive industry, which requires large quantities of power management chips and power semiconductors, will face a new wave of material shortages.

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