The war in Ukraine will affect the smartphone market

Russia’s invasion of Ukraine could increase existing supply chain issues affecting the smartphone industry, although the effects will only be seen in the long term.

tsmc factory japan o21

Following the attack on Ukrainian soil, many Western countries activated sanctions against Russia, which in turn is a major exporter of basic raw materials for various industries. Ukraine itself is rich in rare materials used in electronics manufacturing.

Aware of the fact that the problems of a war are much more serious than the lack of electronic components, we believe that it is to complete the general picture to report these consequences on a portal dedicated to technology.

Russia is the world’s largest exporter of palladium, a metal used in electronic applications such as memory cards and sensors. It is estimated that each iPhone contains around 0.015 grams of this raw material. Additionally, palladium is often used for electrodes or in the plating of components and connectors. According to CNBC, about 35% of the US palladium supply comes from Russia.

Then there is neon gas, which is used as a component and consumable in lasers used in chip production. Ukraine supplies over 90% of the neon semiconductor to the United States. The gas itself, purified in Ukraine, is a by-product of steel production in Russia.

Russia is also a major producer of titanium, which is used in everything from the chassis of specific iPhone models to aircraft construction. However, China and the United States are the main exporters of titanium, which means that the industry is not entirely dependent on the Russian Federation.

Apple, for its part, lists 10 Russia-based smelters and refiners in its supply chain as of December 2020. The smelters and refiners produce tantalum, tungsten, and gold used in Apple products.

The effects of the conflict could then drive up the prices of materials that are not primarily sourced from Ukraine and Russia. For example, Russia produces only 6% of the world’s aluminum, but economic sanctions are driving up the prices of the metal, which is used in the cases of almost all Apple products. There is also, of course, the question of energy. Russia and Ukraine are the main producers of oil and natural gas for Europe. With supply already scarce, the conflict is driving up the cost of energy in some areas.

Although Eastern Europe supplies most of some electronics manufacturing materials, chip companies say they are not currently experiencing significant effects, adding that they are better prepared than in recent years thanks to stockpiles of materials. and diversified purchases. .

Intel says it doesn’t expect a direct impact. The same goes for GlobalFoundries and United Microelectronics Corp, both of which said they have the ability to search for sources outside of Russia and Ukraine. The same goes for TSMC, one of Apple’s main suppliers.

According to Reuters, Taiwanese chipmakers like TSMC use little palladium. Additionally, neon and hexafluorobutadine, another gas used in chip manufacturing, are already stockpiled in Taiwan. The country also claims that its supply chain is diverse enough to withstand any country-specific shortages. Malaysian chipmaker Unisem, which counts Apple among its customers, says it expects no impact as it sources its supplies mainly from the United States, Japan and other countries.

However, the rush to alternative sources could drive up prices for semiconductors and chipsets. And the longer the conflict in Ukraine lasts, the more likely it is to affect the global supply of chips. Some analysts therefore expect long-term consequences, due both to higher prices and to the lack of certain raw materials, especially if the conflict lasts for several weeks.

As mentioned earlier, in the midst of a humanitarian crisis, there are more important priorities than being able to buy a new iPhone or iPad in time. However, in the modern world, chips are essential for a very wide range of industries, from aerospace to automotive, including the medical sector.

Leave a Comment