It is possible that the chip crisis will get worse.
The global crisis in Ukraine continues and will continue to affect global trade. This time, it’s coming for cars. The current situation in Ukraine poses a grave threat to many innocent people. This is worse than the minor inconveniences that are experienced by those indirectly affected. All those directly affected are our thoughts and prayers. Things are only going to get worse when it comes to global trade, specifically the current chip crisis. The key raw material for microchip manufacturing is Ukraine, and this will have a significant impact on new car production.
Ukraine supplies 70% of the world’s neon. This is an essential component that runs lasers needed to make microchips. This new shortage of resources could make it more difficult for the world to address supply chain problems specific to microchips. Russia is also a major producer of neon. However, trade sanctions don’t allow for trade with Russia at the moment, leaving the world in a difficult position when it comes neon supply.
Auto News interview: Carla Bailo, CEO, Center for Automotive Research, stated that “Officially, people will search for alternative sources for neon as fast as possible — but that that’s not something you can just switch on.” This means that as companies seek out new sources, the supply chains are in constant rebuilding mode to meet current demand.
Rumours claim that many chip makers have been stockpiling neon in preparation for the conflict. However, this does not mean that there will be an immediate decrease in chip production. If things continue to worsen, we might see an impact on the supply and demand for new vehicles and other products that depend on microchips.