The recent communication has increase between Nexteck Group and our end users in semiconductor business, of which all issues related on sanction, embargo, logistic routes, sources of raw materials, production line locations, which still seems has minor affection on current Russia-Ukraine crisis.
However, the ongoing geopolitical tussle between Russia & Ukraine is likely to have another casualty to semiconductor chip. Palladium and neon are 2 resources that are key to the production of semiconductor chips.
Given that Russia supplies over 40 % of the world’s supply of palladium and Ukraine produces 70 % of the global supply of NEON, anyone in this business can expect the global chip shortage to worsen should the military conflict persist.
During the 2014-2015 war in Ukraine, NEON prices went up by several times over, indicating how serious this can the industry. Semiconductor exposure companies make up 70 per cent of total neon demand, as it is an integral part of the lithographic process for making chips.
In terms of regions, Moody's Analytics believes the most salient adverse impact will be felt in countries primarily in Europe that are recipients of Russian oil and natural gas. Russia, according to their estimates, holds 12 % of the world’s oil supply and 17 % of its natural gas. It is also a key supplier of palladium and wheat, and along with Ukraine has most of the world’s neon supply.
The global chip shortage came to the forefront during the Covid pandemic in 2020-21, as remote work and mobility restrictions caused the acceleration of digitization worldwide. If a deal is not brokered in the coming months, Moody's Analytics expects the chip shortage to worsen, and for industries highly dependent on them to be impacted accordingly.
Add to that rising crude oil prices, most analysts expect a sharp hike of around RUB 8 – 10 per liter in diesel and petrol prices as crude oil prices moved past USD115 a barrel – the highest level since 2014. All this is likely to impact auto sales over the next few months.
The passenger vehicle, PV segment reported volume drop in February 2022 primarily owing to semiconductor shortages although demand remains robust. The domestic 2 wheeler market continues to display weakness due to subdued demand.
Most of Nexteck end-user of Semiconductors packaging materials, such as WLCSP carrier tape, precision cover tape, dicing tape supplied by Nexteck Singapore Pte Ltd in South-East Asia, are still optimistic on their currently on-going flowing in orders, despite of this Russian-Ukraine conflict.
