Apple Inc AAPL supplier Taiwan Semiconductor Manufacturing Co. TSM is looking for local sources of neon gas after Vladimir Putin‘s war in Ukraine caused a major supply crunch.
What Happened: The chipmaking giant is working with multiple Taiwan-based gas suppliers to explore the local production of neon gas in three to five years, the company’s Senior Vice President of Information Technology, Materials Management and Risk Management, J.K. Lin told Nikkei Asia.
Neon gas is an important component for chipmaking and Russia’s war in Ukraine has disrupted the supply chain from one of the biggest producers that control up to 50% of semiconductor-grade supplies, the report noted, citing Techcet estimates.
According to industry executives, the prices of neon gas skyrocketed; therefore, chipmakers scrambled to secure supplies, forcing giants like TSMC to look for alternatives.
“We have a concrete plan to work with suppliers to localize some neon gas supplies and are currently in the process of buying equipment,” Lin said.
“The idea is to have more sources to increase the level of supply chain safety. However, our plan is not to build all the supplies locally. That is not realistic and very costly,” he added.
Lin revealed that the chipmaker is evaluating supply chain risks and has continuity plans for the next five years to make sure it can source more than 2,000 chipmaking materials and chemicals to meet its expansion goals. “We have had to become much more focused on risk management and sustainability issues. A lot of lessons have been learned for TSMC and also for our suppliers,” Lin said.