The burden of semiconductors raw material prices is expected to continue in the second half of the year. The average import price of neon gas from China soared more than six times in the second quarter compared to the first quarter, when the cost of the gas in the first quarter was considered having the guts. Having to depend on Chinese products due to the prolonged Russia-Ukraine War, there is concern that the soaring import price of neon gas could lead to an increase in semiconductor manufacturing cost.
According to the import and export trade statistics of the Korea Customs Service, the average import price per ton of neon gas from China in the second quarter was $2.28 million, which is an increase of 6.5 folds from $350,000, the average import price of the first quarter.
Neon gas is a raw material for excimer laser gas that is used in the exposure process to engrave semiconductor circuit patterns. The unstable supply and demand led to increased dependence on China when the Russia-Ukraine war broke out earlier this year
The price of neon gas from China jumped 17.5 times since the end of last year. The increased import prices were criticized for taking advantage from the prolonged war in the first quarter. The proportion of neon gas imports by country was 60% from China, 23% from Ukraine, and 5.2% from Russia last year.
The exponential increase in prices is noticeable. The average import price per ton increased from $1.46 million in April, $2.48 million in May, and $2.9 million in June. Despite 70% increase in the average import price in May compared to the previous month, the import volume of neon gas from China recorded an all-time high of 17.1 tons. Even with increase in prices, dependence on China continues to grow.
The increased price of imported neon gas seems to not have been reflected in the price supplied to semiconductor companies. An official from a special gas company said, “The price is currently maintaining at the increased price in the first quarter.”
However, it is only a matter of time before the price increase also reflects to semiconductor companies as the import price of neon gas from China rose significantly in the second quarter. Another concern is that in June, Russia imposed restrictions on exports of rare gases for semiconductor manufacturing, such as neon, argon and helium, requiring special government approval by the end of the year.
Domestic semiconductor manufacturers usually maintain neon gas inventories for more than three months since it is necessary to constantly secure inventory as they are essential materials for producing semiconductor. Given the growing dependence on Chinese products due to the prolonged war, the burden on the domestic semiconductor industry is expected to increase if the import price of neon gas is reflected in the manufacturing cost.
Status of imports of neon gas from China in the first half of the year
Source: Statistics on import and export trade by the Korea Customs Service
By Staff Reporter Yoon-seop Song (email@example.com)