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GPU price increase, Neon gas supply issues could lead to chip shortage

GPU shortage 2022 could result from Ukraine war disruption of Palladium & Neon gas supply

Updated: Mar 4, 2022 6:16 pm
GPU price increase, Neon gas supply issues could lead to chip shortage

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Could the global graphics card shortage and a GPU price increase return in 2022? It’s, unfortunately, a distinct possibility due to Neon gas supply disruption. Despite signs that in the near term that GPU prices could be going down and graphics card supply increasing, global events have produced another headwind to silicon chip production, in the disruption of Neon gas supply from Ukraine and Palladium from Russia – vital components in the silicon chip manufacturing process.

GPU shortage / graphics card price increases, the recent history

GPU availability and GPU price chart AMD Nvidia graphics cards Q3 2021 2

Here at WePC, we’ve been covering extensively the fluctuations in graphics card prices and GPU shortages that have affected the world, due primarily to COVID disrupting labor and logistics in the supply chain of chip manufacture and also demand from crypto miners. This has led to buying a gaming PC becoming more expensive than ever, in particular buying a graphics card. Although we’d hoped that the global silicon shortage could be over, following both China banning crypto mining and more recent developments, it appears that this may be short-lived as we move later into 2022.

Why is Ukrainian Neon & Russian Palladium important to silicon chip manufacture?

GPU price increase chip shortage Palladium supply

Silicon chip manufacture (and therefore graphics card supply) requires Neon gas in order to power the lasers necessary for cutting designs into computer chips. The majority of Neon, which is a rare material, is produced as a byproduct of the steel manufacturing process in Ukraine and then purified for use. According to the Financial Times, Ukraine produces over 90% of the world’s semiconductor-grade Neon, most of this comes from the port cities of Odesa and Mariupol.

Palladium is used to make Palladium-alloy, which is used for plating on electronic chips, being lighter than gold, although not as good a performer in certain areas according to SPC. Nevertheless, Palladium is central to the manufacture of silicon chips. As of 2021, in Asian markets, ‘Palladium cost more than $1,000 more than gold per ounce’. Russia produces 40% of the world’s Palladium, and these supplies have been massively impacted due to the sanctions placed on the country.

What’s going on in Ukraine?

The military forces of the Russian Federation have invaded the country of Ukraine, in what they are terming a ‘special military operation‘, ostensibly to liberate the people of Ukraine from ‘Neo-Nazis’, but which the vast majority of the rest of the world is calling a war of conquest against a fiercely independent democratic nation, and their inspirational (and incidentally Jewish) leader.

In addition to the rapidly increasing loss of life among the civilian population of Ukraine, liberated of their lives by indiscriminate Russian artillery, the industrial centers of Ukraine have ground to a halt. This includes the cities of Mariupol in the South East (which has been under siege and bombardment for days) and Odessa in the South West, which so far is not under Russian attack, but this is only for a matter of time.

As a result of the conflict, both Neon and Palladium prices are now at record highs.

Can China produce replacement Neon & Palladium?

GPU price increase chip shortage Neon supply

China has been attempting to become more self-reliant when it comes to Neon and Palladium production, but this is not an easy process. Neon in particular is siphoned off by older designed steel plants, which few countries besides Ukraine and Russia operate. Setting up the industry to capture this Neon takes time.

Will GPU prices increase?

Ultimately how far graphics card prices and GPU supplies are affected by the Ukraine conflict depends on how long it lasts for. Only small amounts of both Neon and Palladium are used in the manufacturing process for silicon chips, including graphics cards, and the industry will have a supply that will last a few months at least. However, if the conflict continues the lack of supply will be felt throughout the supply chain, and we could see disruption to graphics card supply and GPU price increases in later 2022.

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