Ukraine Crisis Cuts Neon Supply And Could Worsen Chip Shortage


The crisis in Ukraine continues to have an impact on global trade, and this time it’s on your car. The current situation in Ukraine poses a serious threat to the lives of many innocent people, which is much worse than the minor inconveniences experienced by those who are indirectly affected. Our thoughts are with all those who were directly affected. When it comes to global trade and in particular the current chip crisis, things are going to get a lot worse. Ukraine is responsible for an important raw material used to manufacture microchips, which will soon have an impact on the manufacture of new cars.

Ukraine provides 70% of the world’s neon, which is a critical component used to run the lasers needed to manufacture microchips. As the world works to fix supply chain issues specific to microchips, this new resource shortage could push things into a more challenging position. Russia is also a major producer of neon, but trade sanctions do not allow for trade with Russia currently leaving the world in a difficult position in terms of neon supply.

In an interview with Auto News Carla Bailo, CEO of the Center for Automotive Research stated, “Of course, people will be looking for alternative sources of neon as quickly as possible – but it’s not something to just turn on.” This means that while companies are looking for new sources, the supply chain is in the stage of rebuilding to meet current demand.

Rumors suggest that many chipmakers have been stockpiling neon because the current conflict seems almost inevitable. This means there won’t be an immediate reduction in chip production, however, if things don’t improve, we may feel an impact on the supply of new vehicles and other products that rely on microchips.


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