London Daily

Focus on the big picture.
Thursday, Nov 06, 2025

Chipmakers brace for more trouble as Russia limits exports of rare gases

Chipmakers brace for more trouble as Russia limits exports of rare gases

The semiconductor industry just can't catch a break.

After grappling with pandemic-fueled supply bottlenecks, chipmakers are facing a new headache: Russia, one of the world's biggest suppliers of gases used to make semiconductors, has started to limit exports.

Moscow began restricting exports of inert, or "noble" gases, including neon, argon and helium to "unfriendly" countries at the end of May, according to a report by Russian state news agency TASS.

All three gases are used to produce the tiny electronic chips found in a raft of consumer products, from smartphones to washing machines to cars, and which have been in critically short supply for months.

It is one of the latest salvos by President Vladimir Putin against countries that have imposed a slew of sanctions on Moscow in response to his assault on Ukraine. Prior to the war, Russia and Ukraine together accounted for about 30% of the chip industry's supply of neon gas, according to consultancy Bain & Company.

The export limits come just as the semiconductor industry, and its customers, were beginning to shake off the worst of the supply crisis. Last year, carmakers built 10 million fewer vehicles because of the chip shortage, according to LMC Automotive, but supplies were expected to improve in the second half of this year.

"What we don't need, obviously, is another drama with the chip supply that could affect and perhaps stall a recovery," said Justin Cox, director of global production at the automotive consultancy.

He told CNN Business that neon export limits were "worrying," but had not taken chipmakers by surprise. After Russia annexed Crimea from Ukraine eight years ago, the industry had been preparing for further supply disruptions from the region, he said.

Chipmakers have been preparing


Neon plays a critical role in the production of semiconductors, in a process called lithography. The gas controls the wavelength of light produced by a laser as it etches patterns onto the silicon wafers that make up the chip.

Before the war, Russia collected raw neon as a byproduct in its steelworks, then sent it to Ukraine for purification. The two countries have been leading producers of noble gases since the days of the Soviet Union, when the superpower used them to build its military and space technologies, Jonas Sundqvist, senior technology analyst at Techcet, a market research company, told CNN Business.

The conflict has caused lasting damage to capacity. Intense fighting in some of Ukraine's cities, including Mariupol and Odessa, two strategically important port cities, has destroyed industrial sites and made it extremely difficult to export goods from the region.

"Now we have permanent loss of some purification capability in Mariupol and Odessa," Sundqvist said.

But semiconductor manufacturers have been reducing their dependence on the region ever since Russia invaded Crimea in 2014.

Peter Hanbury, a partner at Bain & Company's manufacturing practice for the Americas, told CNN Business that chip makers have redoubled their efforts in the wake of February's invasion.

The industry's dependence on Ukraine and Russia for neon was "historically very high" at between 80% and 90%, Hanbury said. But since 2014, chipmakers have whittled that down to less than one third.

"The industry recognized the risk associated with [the region] and began basically qualifying new sources, developing new countries and specific suppliers," he added.

Price rises


It is still too early to know how Russia's export restrictions will impact semiconductor makers.

So far, the war in Ukraine has not impaired production of chips, Hanbury said.

"I don't think we're going to see an impact for at least a few months... I do think that the impact that we see will likely be somewhat minimal," he said.

However, even if chipmakers can replace lost supply from the region, they are likely to end up paying much more for the vital gases.

It is difficult to track the price of neon and other gases, because most are traded under private long-term contracts, Sundqvist said. But Techcet estimates that neon contract prices have already increased fivefold since the invasion earlier this year, and will remain at those elevated levels in the near-term.

"[Russia's export limits] will definitely have an impact on any new contracts," Sundqvist said.

South Korea, home to giant chipmaker Samsung (SSNLF), will feel the pain first, he added, because it is reliant on noble gas imports and — unlike the United States, Japan and Europe — lacks big gas companies which could ramp up production.

Samsung overtook Intel (INTC) last year as the biggest semiconductor maker by revenue, according to data compiled by Counterpoint Research.

Micron Technology (MU), another of the world's biggest chip manufacturers, told CNN Business that it has seen noble gas prices increase, but that it had "sufficient supply for the next few months" and does not expect to make any cuts to its production in the short term.

"[We] are taking steps to secure additional supply for a longer period," a company spokesperson said.

China could benefit


Countries are now racing to build up their chipmaking capacity after two years that left them brutally exposed to the volatility of global supply chains.

Intel has offered to help the US government with its plan, and earlier this year announced it would invest $20 billion in two new factories. Last year, Samsung also committed to building a $17 billion facility in Texas.

More chipmaking will likely translate into higher demand for the noble gases.

With Russia threatening to curtail its exports, China could be a big beneficiary. It has the "biggest, newest" production capacity, according to Sundqvist.

Since 2015, the country has poured investment into its own semiconductor industry, including into the equipment needed to separate noble gases from other industrial products. China is now a net exporter of these gases, and claims to be self-reliant, he said.

The world's demand for noble gases will likely concentrate on China, Sundqvist added, and the county will "get a good price for [its] product."

Newsletter

Related Articles

0:00
0:00
Close
Massive Spoilers Emerge from MAFS UK 2025: Couple Swaps, Dating App Leaks and Reunion Bombshells
Kurdish-led Crime Network Operates UK Mini-Marts to Exploit Migrants and Sell Illicit Goods
UK Income Tax Hike Could Trigger £1 Billion Cut to Scotland’s Budget, Warns Finance Secretary
Tommy Robinson Acquitted of Terror-related Charge After Phone PIN Dispute
Boris Johnson Condemns Western Support for Hamas at Jewish Community Conference
HII Welcomes UK’s Westley Group to Strengthen AUKUS Submarine Supply Chain
Tragedy in Serbia: Coach Mladen Žižović Collapses During Match and Dies at 44
Diplo Says He Dated Katy Perry — and Justin Trudeau
Dick Cheney, Former U.S. Vice President, Dies at 84
Trump Calls Title Removal of Andrew ‘Tragic Situation’ Amid Royal Fallout
UK Bonds Rally as Chancellor Reeves Briefs Markets Ahead of November Budget
UK Report Backs Generational Smoking Ban Ahead of Tobacco & Vapes Bill Review
UK’s Domino’s Pizza Group Reports Modest Like-for-Like Sales Growth in Q3
UK Supplies Additional Storm Shadow Missiles to Ukraine as Trump Alleges Russian Underground Nuclear Tests
High-Profile Broodmare Puca Sells for Five Million Dollars at Fasig-Tipton ‘Night of the Stars’
Wilt Chamberlain’s One-of-a-Kind ‘Searcher 1’ Supercar Heads to Auction
Erling Haaland’s Remarkable Run: 13 Premier League Goals in 10 Matches and Eyes on History
UK Labour Peer Warns of Emerging ‘Constituency for Hating Jews’ in Britain
UK Home Secretary Admits Loss of Border Control, Warns Public Trust at Risk
President Trump Expresses Sympathy for UK Royal Family After Title Stripping of Prince Andrew
Former Prince Andrew to Lose His Last Military Title as King Charles Moves to End His Public Role
King Charles Relocates Andrew to Sandringham Estate and Strips Titles Amid Epstein Fallout
Two Arrested After Mass Stabbing on UK Train Leaves Ten Hospitalised
Glamour UK Says ‘Stay Mad Jo x’ After Really Big Rowling Backlash
Former Prince Prince Andrew Faces Possible U.S. Congressional Appearance Over Jeffrey Epstein Inquiry
UK Faces £20 Billion Productivity Shortfall as Brexit’s Impact Deepens
UK Chancellor Rachel Reeves Eyes New Council-Tax Bands for High-Value Homes
UK Braces for Major Storm with Snow, Heavy Rain and Winds as High as 769 Miles Wide
U.S. Secures Key Southeast Asia Agreements to Reshape Rare Earth Supply Chains
US and China Agree One-Year Trade Truce After Trump-Xi Talks
BYD Profit Falls 33 % as Chinese EV Maker Doubles Down on Overseas Markets
US Philanthropists Shift Hundreds of Millions to UK to Evade Regulatory Uncertainty in Trump Era
Israeli Energy Minister Delays $35 Billion Gas Export Agreement with Egypt
King Charles Strips Prince Andrew of Titles and Royal Residence
Trump–Putin Budapest Summit Cancelled After Moscow Memo Raises Conditions for Ukraine Talks
Amazon Shares Soar 11% as Cloud Business Hits Fastest Growth Since 2022
Credit Markets Flooded with More Than $200 Billion of AI-Linked Debt Issuance
U.S. Treasury Secretary Scott Bessent Says China Made 'a Real Mistake' by Threatening Rare-Earth Exports
Report Claims Nearly Two Billion Dollars in Foreign Charity Funds Flowed into U.S. Advocacy Groups
White House Refutes Reports That US Targeting Military Sites in Venezuela
Meta Seeks Dismissal of Strike 3’s $350 Million Copyright Lawsuit
Apple Exceeds Forecasts With $102.5 Billion Q3 Revenue Despite iPhone Miss
Israel's IDF Major General Yifat Tomer-Yerushalmi Admits to Act Amounting to Aiding Hamas During Wartime (Treason)
Shawbrook IPO Marks London’s Biggest UK Listing in Two Years
UK Government Split Over Backing Brazil’s $125 Billion Tropical Forest Fund Ahead of COP30
J.K. Rowling Condemns Glamour UK Feature of Nine Trans Women as 'Men Better at Being Women'
King Charles III Removes Prince Andrew’s Titles and Orders His Departure from Royal Lodge
UK Finance Minister Reeves Releases Email Correspondence to Clarify Rental-Licence Breach
UK and Vietnam Sign Landmark Migration Deal to Fast-Track Returns of Irregular Arrivals
UK Drug-Pricing Overhaul Essential for Life-Sciences Ambition, Says GSK Chief
×