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Global Chip Shortage: Russia-Ukraine Crisis

Global Chip Shortage: Amid Ongoing Russia-Ukraine Crisis

Russia and Ukraine are important centres of the global semiconductor supply chain, providing rare metals like palladium, and gases like neon, that are needed in the production of the silicon wafers present in almost all modern devices and equipment.

  • Amid the ongoing Russia-Ukraine crisis, it is expected that the situation may worsen global chip shortage.
  • Just as Russia supplies the global semiconductor industry with rare metals, Ukraine supplies (speciality) gases required by the chip-making industry.
  • Thus, there is potential to extend the stress in the supply chain of semiconductors, which are key to manufacturing autos and other electronic equipment in the Asia-Pacific region.

Semiconductor Chips:

  • Semiconductors are materials which have a conductivity between conductors and insulators. They can be pure elements, silicon or germanium or compounds; gallium, arsenide or cadmium selenide.
  • Semiconductor Chips are the basic building blocks that serve as the heart and brain of all modern electronics and information and communications technology products
  • They are now an integral part of contemporary automobiles, household gadgets and essential medical devices such as ECG machines.
  • The Covid-19 pandemic-driven push to take sizable parts of daily economic and essential activity online, or at least digitally enable them.
  • The pandemic and the subsequent lockdowns across the world also forced shut crucial chip-making facilities in countries including Japan, South Korea, China and the US.
  • India currently imports all chips and the market is estimated to touch $100 billion by 2025 from $24 billion now.