War pushes up noble gas prices for semiconductor industry

Semiconductor foundries have raised prices by 15%

Chief Business Officer of Micron Technology Sumit Sadana (left) and Micron India Managing Director Anand Ramamoorthy at a media interaction in Hyderabad on Tuesday. | Photo Credit: N. Ravi Kumar

A sharp increase in the price of noble gases is one of the impacts of the Russia-Ukraine war on the semiconductor industry even as it emerges from challenges to the supply chain posed by the pandemic.

War is creating an impact on various aspects of supply chain sourcing products from that region and one example is noble gases used in semiconductor manufacturing, according to Sumit Sadana, Chief Business Officer of Micron Technology.

Micron, like other semiconductor companies, is working with supply chains around the world on “how we can source some of the gases. But, definitely the prices of those gases have gone up a lot,” he said.

“There is cost inflation happening due to rising prices,” he said during a media interaction on Tuesday. Stating that the war has impacted cost structure of the industry, he said rising oil and gas prices were pushing up electricity costs. There is also an impact on demand.

“There is reduction in sales of mobile phones, PCs and laptops and most consumer products in that region,” he said.

Mr. Sadana said while it was tough to estimate the cost impact, an indicator is semiconductor foundries increasing prices by 15%. On whether there is a pass through, he said since companies have to protect their financial performance, some aspects of the cost, that cannot be offset, would get passed on to consumers.

The foundries are raising prices of logic wafers and obviously everyone has to protect financial performance. Generally, some aspects of this cost that cannot be offset will get passed on to consumers.

On the shortage of semiconductors witnessed during the pandemic, he said “as we look ahead, certain shortages have improved already... we expect most to have improved substantially through calendar 2022. [In] only a few products, shortages will persist in 2023,” he said.

Micron India managing director Anand Ramamoorthy said the company plans to hire about 1,800 people thus taking its headcount in the country to 5,000. Most of the employees will be based in Hyderabad, where it opened a global development centre in 2019, with the rest in Bengaluru. In Hyderabad, Micron will be moving to a bigger 1.1 million sq ft facility.