The ongoing war between Russia and Ukraine has already had implications for the motoring world, with numerous brands pulling exports and operations from Russia and other brands on the back foot having to deal with wiring harness Ukraine supply shortages.
The next crisis on the horizon for the industry could result in an extension to the existing chip shortage.
Along with being a major supplier of wiring harnesses, Ukraine is also a major supplier of neon. According to an overnight report by Automotive News, the nation produces 70% of the world’s supply of neon gas.
This gas is an integral component in semi-conductor construction, used by the lasers that in turn help produce the chips. The report indicates that a neon shortage could give the semi-conductor shortage and second wind.
Such a shortage may impact US production the most, with some reporting that almost all the country’s neon supply comes from Ukraine and Russia. Evidently, Ukraine’s neon production is dependent on Russia, meaning that even if the war were to end soon, there may be future political complications and subsequent price rises.
“Of course, people will look for alternative sources of neon as quickly as they can—but that’s not something that can just be switched on,” Carla Bailo, CEO of the Center for Automotive Research, told Automotive News.
“Eventually, if semi-conductors don’t come, we’ll be right back to where we were last year.”
It’s expected that the effect of a neon shortage won’t be felt by the industry for a period, due to manufacturers pre-emptively hoarding neon stock.
For the last two years car manufacturers worldwide have been dealing with a semi-conductor shortage, prompted in part by Covid-19 and subsequent travel restrictions around the world.
This shortage forced brands across the globe into an inconsistent rhythm, with some still dealing with occasional factory closures due to lack of chip supply, and almost all brands dealing with inconsistent stock deliveries.
It had been speculated that the chip shortage could be over and done with by mid-2022, as the world edges closer to a lockdown and travel restriction free future.
The focus on Ukrainian neon supply has also prompted focus on the other resources that could be in short supply in the wake of the war.
There’s concern that palladium could be next to face shortages. It’s a metal used in the production of catalytic converters, with Russia being a leading supplier. Iron, titanium, and coal prices are also vulnerable, with Ukraine being a producer of all three.
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