Chipmakers downplay fears Ukraine crisis will worsen shortages

With the semiconductor industry stretched thin by the pandemic and an unprecedented surge in demand, chipmakers had a reassuring message Thursday: The crisis in Ukraine is unlikely to make shortages worse.

Russia is a small market for the chip industry and its invasion of Ukraine doesn’t represent a threat to chip supply, the Semiconductor Industry Association said Thursday. U.S. and allied sanctions against Russia also are unlikely to have a significant effect on industry sales, the group said. “While the impact of the new rules to Russia could be significant, Russia is not a significant direct consumer of semiconductors, accounting for less than 0.1% of global chip purchases,” SIA Chief Executive Officer John Neuffer said in a statement.

“In addition, the semiconductor industry has a diverse set of suppliers of key materials and gases, so we do not believe there are immediate supply disruption risks related to Russia and Ukraine.” Ukraine’s status as a major producer of neon has sparked concerns because the gas is used in semiconductor manufacturing. But chip companies, which were alerted to this possible chokepoint in 2014 when Russia annexed Crimea, have diversified their suppliers since then.

Some individual companies also issued statements aimed at calming customers. “We do not anticipate any impact on our supply chain,” Intel said. “Our strategy of having a diverse, global supply chain minimizes our risk of potential local interruptions.” GlobalFoundries Inc., the U.S.’s largest provider of outsourced chipmaking, said having plants around the world — with their own local suppliers — helps mitigate risk.

The company has factories in upstate New York, Singapore, and Dresden, Germany. “At GlobalFoundries, we do not anticipate a direct risk,” the company said in a statement. “We are not totally immune to global shortages, but our footprint provides us with more insulation.” Bloomberg