Ukrainian-Russian Conflict Affects Semiconductor Gas Supply and May Cause Rise in Chip Production Costs, Says TrendForce

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.