Russian Invasion and Sanctions Set to Cripple Global Chip Supply

Russia and Ukraine are important in the supply chain of components for semiconductor manufacturing. They produce important rare earth metals and gasses, which are critical in the production of computer chips. Russia is the single largest source of Palladium in the world with more than 40% of the world’s supply and Ukraine is a leading exporter of neon gas. The shortages in these key materials will result in even higher prices and longer lead times. 

“There is tremendous concern that Russia, a key exporter of palladium, is going to face severe disruptions as the flight bans are going to impose big trouble in getting supplies to different places,” said Edward Moya, senior market analyst at OANDA.

How can supply professionals bridge the gap between current demand and long lead time delays from the factory when there are no parts in distribution? The best way is to find existing stock, primarily through excess market channels. 

The Palladium market already has tight inventories and now the geopolitical risks are going to lead to severe supply shortages. MLCC capacitors, memory, and sensors are at the top of the list of chips to be affected by a Palladium shortage.

On top of the already increased shortage of chips, electronic manufacturers are also competing with the automotive industry for Palladium as more companies are moving towards electric vehicles.

Neon gas is used for the most critical process – etching circuit designs into silicon wafers to create chips. Ukraine extracts neon gas during the purification process of a by-product from Russian steel manufacturing. It is said that most companies only have a six to eight week stockpile of neon gas that can be used in production. The scramble for stock has already started and is not projected to balance out until at least 2023, according to White House analytics reporting.

Pairing with a mature excess procurement partner, like iBuyXS, allows companies to gain access to the excess stock sellers have. iBuyXS has access to unique channels of factory packaged components. Our top notch staff is here to help source the shortages you need and sell the excess you have.

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