We Haven’t Yet Solved Our Semiconductor Dilemma

The passage of the bipartisan CHIPS and Science Act should alleviate semiconductor chip shortages that have increased prices and reduced supplies of cars, medical devices, and consumer electronics. But it would be premature to declare victory. Russia’s war on Ukraine has squeezed the market for rare gases like helium and neon that are vital to semiconductor production – highlighting our continued vulnerability in an unstable world.

The CHIPS and Science Act will bolster U.S. semiconductor research, development, and production, making critical investments in domestic production of the building blocks of all modern technology. But the legislation does not solve the quandary of sourcing rare earth materials and gases from China, Russia, and other geopolitical rivals. There is a vital need for more financial support for materials producers. Without it, building a semiconductor gases and chemicals plant in the United States will be prohibitively expensive for most chemical manufacturers – forcing us to continue to rely on imports from unstable regions. Additionally, the aftermath of COVID-19 will continue to increase production uncertainty and the risk of logistics interruptions, putting U.S. supply-chain imports at further risk.

TECHCET and the Critical Materials Council have been actively tracing supply chain origins and disruptions emanating from Russia and elsewhere. The Russia-Ukraine disruptions are especially alarming since both countries are major global sources of semiconductor-grade rare gases. To put this into perspective, TECHCET estimates that 40-50% of the world’s semiconductor-grade neon comes from Ukraine. Additionally, Russian state-owned Gazprom, one of the world’s largest natural gas and helium providers, ramped up production.