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Workers observe the movement of wafers around the GlobalFoundries’ Fab 8 plant in Malta. The war in Ukraine is causing angst in the industry since Ukraine is a major supplier of neon gas used in the chip manufacturing process. GlobalFoundries said it can source the gas from other areas if needed.
GlobalFoundries’ Fab 8 chip factory in Malta employs 3,000 people. The company and other chip manufacturers are facing a challenging time with war in Ukraine and a global chip supply shortage.
MALTA – Russia’s violent invasion of Ukraine is only complicating efforts by the computer chip industry to ramp up production in order to address the global microchip shortage that has been contributing to record consumer goods price inflation, especially within the auto industry.
That’s because Russia and Ukraine are major suppliers of gases and materials to chip manufacturers. Russia is a major exporter of palladium, while Ukraine is a major source of neon gas; both are used in chipmaking.
For now, the computer chip industry, which includes GlobalFoundries in Saratoga County, says it should be OK and can get palladium and neon from other countries if needed.
This is just another bottleneck the industry will have to deal with after the COVID-19 pandemic and its effect on global shipping and trade exposed the fragility of the supply chain in the chip industry – especially in the U.S.
Ukraine is a top global supplier of neon because it is a byproduct of Soviet-era steel mills in that country. It supplies a majority of the semiconductor industry’s neon gas. Neon is used in the lasers that etch chip designs onto silicon wafers during the chipmaking process.
GlobalFoundries spokesman Michael Mullaney said that the company, which employs 3,000 people in the town of Malta, is monitoring the “situation very carefully,” but the fact that it has factories in Asia, Europe and North America gives it flexibility to obtain “alternative sources” of materials outside of Russia and Ukraine.
“We are not totally immune to global shortages, but our footprint provides us with more insulation,” Mullaney said.
The Semiconductor Industry Association, a Washington, D.C., trade group for the chip industry, had a similar tone in response to the potential materials shortages caused by the Russian invasion of Ukraine and the economic sanctions levied against Russia by the U.S. and its allies that have condemned the war.
“The semiconductor industry has a diverse set of suppliers of key materials and gases, so we do not believe there are immediate supply disruption risks related to Russia and Ukraine,” the chipmaker association said in a statement.
The war in Ukraine does make efforts to pass the $52 billion federal CHIPS Act even more pressing for the industry and New York’s congressional delegation. The bill, which was authored by U.S. Senate Majority Leader Charles E. Schumer of New York, is designed to help the U.S. reestablish its semiconductor supply chain that has been exported to Asia and is in jeopardy of being taken over by China.
Like Russia, China is a geopolitical foe of the U.S. and therefore the CHIPS Act is expected to help the U.S. better control its ability to make chips domestically instead of relying on other countries that may become hostile to the U.S. and its allies.
That’s why New York’s congressional delegation has been pushing to get the CHIPS Act passed as soon as possible, especially with Russia now bearing down on Ukrainian cities. That includes U.S. Rep. Paul Tonko, the Democratic congressman from Amsterdam. The CHIPS Act, which is part of a larger technology funding bill, is currently in the reconciliation process in the House and Senate after passing both, and Tonko has been trying to get the legislation passed.
“For America’s economy, job growth and national security, the congressman is of the strong belief that there simply cannot be any delay in passing (of the CHIPS Act),” said Tonko spokeswoman Rachel Dejean.
Larry Rulison has been a reporter for the Albany Times Union since 2005. Larry’s reporting for the Times Union has won several awards for business and investigative journalism from the New York State Associated Press Association and the New York News Publishers Association. Contact him at 518-454-5504 or lrulison@timesunion.com.