Here is how Russia – Ukraine crisis will affect the technology industry

Presently, there is a lot going on between Russia and Ukraine which involves lives and properties. The ongoing war between these countries means a lot for different industries. Russia and Ukraine may not seem very significant to the global technology industry but they play a huge role. So, how will the ongoing war between these countries affect the technology industry?

Russia - Ukraine Crisis
Flag of Russia and Ukraine painted on a concrete wall. Relationship between Ukraine and Russia

Ukraine supplies neon gas for semiconductor manufacturing, while Russia is one of the producers of nickel ore. Nickel is a key material for electric vehicle batteries. Once the conflict heats up, the vehicle industry will bear more cost increases and supply chain instability. The development of new energy vehicles in 2022 will add variables.

Ukraine supplies the U.S. with more than 90% of its semiconductor-grade neon gas. Like we said earlier, this noble gas is essential for lasers used in chip manufacturing. According to market research firm Techcet, neon gas is a by-product of Russia’s steel industry and is purified in Ukraine. Currently 35% of palladium in the United States comes from Russia, which is mainly used in sensor and memory manufacturing.

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Looking forward to 2022, as the global energy conservation and carbon reduction direction remains unchanged, and the proportion of car manufacturers’ product lines shifts to electric vehicles. There are estimates that the total number of new energy vehicles will exceed 10 million in 2022. However, there is so much uncertainty. The Russia – Ukraine situation is already causing crude oil prices to rise. It wouldn’t take long before neon and nickel ore begin to increase prices.

Not significant but relevant

While many manufacturers believe that the Russia – Ukraine war will not affect their production, the relevant raw materials will begin to increase prices. This will eventually lead to a price increase of the final product. The U.S. reminds the chip industry to diversify its supply chain in case Russia retaliates against the U.S. It expects Russia to threaten export curbs and block access to critical materials.

“Russia is currently not one of the major markets for Taiwan’s chip foundry industry,” said Joanne Chiao, senior analyst at market research firm TrendForce.

TrendForce research shows that the total sales of new energy vehicles (including pure electric vehicles, plug-in hybrid electric vehicles, and fuel cell vehicles) will reach 6.473 million units in 2021, with an annual growth rate of 122%, the highest growth rate since the development of vehicle electrification. Among them, pure electric vehicles (BEV) account for about 71.6%, plug-in hybrid electric vehicles (PHEV) account for about 28.1%, and the scale of fuel cell vehicles is still small.

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