What neon gas shortages means for the chip industry?

Neon gas was first discovered in 1898 by Morris Travers and William Ramsay, two British chemists who were experts at finding rare gases. It may sound unbelievable, but the scientist duo actually had to freeze and liquefy air to confirm the existence of neon. 

The gas makes up only 0.0018% of Earth’s atmosphere, but the use of neon is not just limited to funky party lights. This shiny element is also involved in the manufacturing of semiconductor chips that run our smartphones, cars, and laptops. 

The mighty lasers that turn silicone into circuit boards during the chip manufacturing process actually require neon gas to function. 

But do you know where most of this neon gas comes from?

About 90% of the global demand for semiconductor-grade neon is fulfilled by Ukraine. Before being attacked by Russia, Ukrainian companies Ingas and Cryoine alone were supplying between 45% to 54% of the neon required for semiconductor chip production. 

While Ingas generated up to 20,000 m3 (706,293 cubic feet) of neon per month, its rival Cryoin produced over 15,000 m3 (529,000 cubic feet). Unfortunately, because of the current situation in Ukraine, the world is facing a serious neon gas shortage. 

What’s surprising is that a typical American household already maintains approximately 8.28 liters (17.5 pints) of neon gas storage in laser-based toys, television tubes, lights, and stickers. But can we use this neon to meet the needs of the semiconductor industry? 

Of course not, because the lasers used in chip manufacturing demand purified high-quality neon gas that can only be obtained directly from the air using specialized technologies. For example, companies like Ingas and Cryoin have powerful air separation plants that are capable of processing large volumes of air to extract the 0.0018% neon out of it, and that too in liquid form. 

Ukraine’s neon manufacturing units had to shut down their operations in March as the conflict with Russia escalated, and even at present, nobody is sure when peace will be restored in the region. 

Meanwhile, the losses incurred by the semiconductor industry in the past eight months have made them realize the significance of neon gas. This is why most of the leading semiconductor chip producers are now putting in efforts to produce neon locally. 

If they become successful in doing so, there will be many new neon players in the market by the time Ukrainian companies resume their operations. We are yet to discover where the neon gas market will actually go from there.