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What’s Going on With the Microprocessor Shortages?

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What’s Going on With the Microprocessor Shortages?

Computers depend on microprocessors, also known as computer chips. Currently there’s a microprocessor shortage, which is bad news for all of us. It may not be the worst crisis the world is facing, but it’s still a significant problem, and some sectors are harder hit than others. With Russia’s invasion of Ukraine, things can only get worse, because about half of the world’s semiconductor-grade neon, a key component of microchips, comes from Ukraine. Work at Ingas and Cryoin, who refine neon in Ukraine, has been halted by the invasion and the supply chain has been badly disrupted.

Fewer Chips, But More Demand

Microchip production has been seriously impacted, at a time when devices that use microchips are in more demand than ever. Mobile devices and smartphones have been essential for many during the COVID-19 pandemic, but the shortage of microprocessors has put up the prices of many devices, including phones, computers and even cars. The additional disruption to the supply chain caused by the Ukraine war means that things aren’t going to get better any time soon.

Major chip manufacturers do have stocks of neon, but they aren’t going to last forever, and will need to be replenished. Shortages in new devices that rely on microchips are anticipated, and prices are expected to keep going up. Adding to the problem is the fact that the neon from Ukraine is a by-product of steel manufacturing by Russia. As long as the conflict continues, the problem is likely to persist for some time to come.

Rising Costs

This isn’t the first time that Russian actions have impacted the neon market. In 2014, Russia annexed the Crimean peninsula, which was then Ukrainian territory. The result was that the price of neon rose by 600%. Inevitably, this cost is then passed on to consumers.

The biggest chip manufacturers have been able to procure materials to carry on making microprocessors, but small chip manufacturers are not so well-placed and their production capacity is likely to be seriously impaired as long as the conflict goes on. Although alternative neon production operations could be set up elsewhere, it’s not going to happen any time soon. Creating the necessary infrastructure could take as long as two years, and the costs will only add to the rising price of products that depend on chips. The longer the Ukrainian invasion continues, the longer the crisis will persist, so the industries affected are desperately hoping a resolution will be found soon.

The microprocessor shortage in the wake of the Russia-Ukraine conflict means that we have had to revisit our technology procurement strategies. However, you can be confident that our goal at Quikteks is to ensure your business can access the technology you need to grow and thrive. For more information on how we can assist you with new technology for your business, call us at
(973) 882-4644.

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