Russian forces invaded Ukraine on Feb. 24, impelling residents to flee their homes and seek refuge in neighboring countries. The war galvanized nations and conglomerates to take punitive actions against Russia (e.g. economic sanctions). As such, tech pundits are discussing whether the conflict will exacerbate supply-chain issues.
The chip shortage is already hampering production in the tech industry, but the question is, will the Russia and Ukraine war inflame it? Some say that tech companies, including Apple, could face difficulties. Others say there's nothing to worry about.
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How the Russia and Ukraine conflict affects Apple and other tech companies
From AppleInsider's perspective, Russia's invasion could negatively affect Apple's supply chain. After all, Russia is a major exporter of raw materials that are critical to the tech industry, including palladium, a metal used in sensors and memory cards.
A typical iPhone consists of 0.015 grams of palladium, according to the United States Gold Bureau. On a macro level, more than a third of the U.S.' palladium supply is from Russia. It doesn't stop there. As of December 2020, Apple listed 10 Russia Federation-based refiners and smelters in its supply chain. They produce tungsten, tantalum and gold for the Cupertino-based tech giant, which can be found in Apple's products.
As a result, AppleInsider surmised that the Ukraine and Russia war could increase material prices for Apple. In fact, according to Reuters, the price of aluminum already surged to record highs after several nations imposed sanctions on Russia (a major producer of aluminum).
Despite these troubling facts, some say that the Russian invasion will have little to no impact on the tech industry's supply chain.
Chipmakers claim that Russia and Ukraine conflict isn't a threat
Ukraine is major producer of neon gas, which is used in semiconductor manufacturing. According to AppleInsider, Ukraine's neon gas is a byproduct of steel production in Russia. The afflicted nation supplies a whopping 90% of neon gas to U.S.' semiconductor industry.
However, chip companies aren't sweating it. They're already one step ahead, according to Bloomberg. They foresaw disaster when Russia annexed Crimea in 2014. Since then, semiconductor manufacturers diversified their suppliers.
“We do not anticipate any impact on our supply chain,” an Intel spokesperson told Bloomberg. “Our strategy of having a diverse, global supply chain minimizes our risk of potential local interruptions.”
GlobalFounderies Inc., the U.S.' largest provider of outsourced chip manufacturing, concurred with Intel in a statement: "We do not anticipate a direct risk. We are not totally immune to global shortages, but our footprint provides us with more insulation."
Bloomberg Opinion Columnist Tae Kim isn't convinced. "While some chipmakers are fortunate to have [neon gas] suppliers outside the [warring] region, others are not," he said. Kim added that while China and U.S. have facilities that manage neon gas production and purification, it will "take a long time" to meet demand if Ukraine-based suppliers are blocked.
It's too early too tell whether the Ukraine and Russia conflict will exacerbate the chip shortage, but perhaps both sides are correct. Some tech companies may, in fact, be affected by the war, especially if they didn't prepare for this outcome by diversifying their suppliers. Those who saw this coming and took action, however, will be insulated from the supply-chain mayhem.
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Kimberly Gedeon, holding a Master's degree in International Journalism, launched her career as a journalist for MadameNoire's business beat in 2013. She loved translating stuffy stories about the economy, personal finance and investing into digestible, easy-to-understand, entertaining stories for young women of color. During her time on the business beat, she discovered her passion for tech as she dove into articles about tech entrepreneurship, the Consumer Electronics Show (CES) and the latest tablets. After eight years of freelancing, dabbling in a myriad of beats, she's finally found a home at Laptop Mag that accepts her as the crypto-addicted, virtual reality-loving, investing-focused, tech-fascinated nerd she is. Woot!