As Russia and Ukraine enter a war, the semiconductor industry, which is the core of our economy, is on high alert. The reason is that xenon (Xe), neon (Ne), and krypton (Kr) are essential materials for semiconductor processes, and if their supply is interrupted, the semiconductor process can also be disrupted, so the semiconductor industry is said to be putting all its efforts into securing these rare gases regardless of the price.

On February 28, Minister of Trade, Industry and Energy Moon Seung-wook visited TEMC (CEO Won-yang Yoo), a special gas materials company located in Boeun, North Chungcheong Province. The visit was made to check the supply and demand situation of rare gases such as xenon, neon and krypton used in semiconductor manufacturing due to the war between Russia and Ukraine.



On that day, Minister of Trade, Industry and Energy Moon Seung-wook evaluated that the impact of the Russia-Ukraine situation on the supply of rare gases such as neon is still limited, and that companies are responding quickly by increasing their inventory of the relevant gases by three to four times the usual amount and reviewing countermeasures for future developments such as utilizing alternative supply lines.

Regarding this, TEMC CEO Yoo Won-yang said that in cooperation with POSCO, they succeeded in developing domestic neon gas production facilities and technology early this year, and predicted that they will be able to supply domestic neon gas to semiconductor device manufacturers in earnest starting in the second half of this year.

In addition, it was revealed that the government is also developing domestic production technology for xenon and krypton gases together with POSCO through government R&D.

The reason the government and companies are monitoring and examining trends of rare gases for semiconductors is because rare gases account for a large proportion of the semiconductor process.

Neon is the largest component of the excimer laser gas mixture, which generates laser light for precision photolithography in semiconductor processes and is also used for annealing polysilicon films for semiconductors and flat panel displays.
/> Xenon and krypton are used in the hole etching process in 3D NAND and are essential as momentum gases to improve the selectivity of fluorocarbon special gases. In particular, the production and technological advancement of 3D NAND are accelerating, and its usage is increasing explosively.

The price of rare gases, which are essential in semiconductor processes, has been skyrocketing recently due to supply and demand instability.

Neon is produced in the United States, Russia, Ukraine, the Netherlands, France, Germany, and China, with Russia and Ukraine accounting for 50% of the global market share and China accounting for 25%.

Neon prices have been on a steady decline for several years, due to a global neon supply crisis in 2015 that sent prices skyrocketing hundreds of times. Since then, with improvements in semiconductor processes that allow for recycling or reducing the use of neon, the amount of neon used has decreased, and prices have fallen sharply.

Neon, which had an import price of $85 per kg in 2014, soared more than fourfold to $396 per kg during the neon wave in 2015, and then continued to decline, dropping eightfold to $46 per kg in 2020.

Until 2020, there were many negative outlooks on neon, including supply shortages and price increases, unless there were special issues.

On the other hand, prices are skyrocketing due to the recent war between Russia and Ukraine, which is highly dependent on imports from Russia and Ukraine (accounting for 28%), and local prices in China, the largest exporter of neon to our country, are rising rapidly.

As of January 2022, the price of neon per kilogram was $121, more than tripling compared to 2020.




In particular, prices from China have risen sharply, and the main reasons are analyzed to be the decline in steel production in China, which has led to a drop in the operating rate of air separation equipment, the blockage of logistics due to COVID-19, and the decrease in neon production. Additionally, the psychological anxiety caused by the Russo-Russian War is leading to an increase in the price of Chinese neon.

Accordingly, import prices for products from the US and Europe, in addition to those from China, are also rising, and the domestic distribution price of neon has already more than doubled.

Industry experts predict that if this trend continues, a 600% increase is possible within this year.

Accordingly, it is expected that the semiconductor industry will pay significant additional costs for purchasing neon.

The price increases for not only neon but also xenon and krypton are also scary.

Xenon and krypton are limited in supply as well as price, so securing quantity is important, and the fact that supply is quite tight is also a factor of uncertainty in the market.

In the case of xenon and krypton, it has been reported that domestic companies are unable to place orders as usual, and overseas manufacturers are calling to notify them of the quantity they have available one-off, and it has gotten to the point where if a purchase contract is not made within an hour, they cannot purchase regardless of the price.

Accordingly, domestic rare gas distribution companies are also risking their lives to secure supplies.

Currently, domestic rare gas distribution companies are reporting that the market situation is very bad, saying that supply is quite tight and that any deviation from the supply and demand roadmap could lead to a shortage.

Meanwhile, semiconductor companies such as Samsung Electronics and SK Hynix are expected to see a continued increase in their use of neon, xenon, and krypton in the future, and are expected to spend significant amounts on purchasing rare gases as prices skyrocket along with the supply and demand of rare gases.

It is also reported that they are closely monitoring this situation as a shortage of rare gases could also cause disruptions in semiconductor production.