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Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

reuters.com

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Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#11

Post by roughly »

perihelions wrote: post #2

How is neon extracted and why does one country have a 90% monopoly (in this specific grade)? edit: Found this C&EN story from 2016 that adds context: - "Chip makers, which account for more than 90% of global neon consumption, are already experiencing high prices and some shortages stemming from the Russian conflict with Ukraine, Shon-Roy says. The war, which started in 2014, interrupted global supplies of the gas, ab…

Scale and geographic concentration tend to push prices lower, even if just fractionally, and relatively low costs of transport for basically anything in the world mean there's no penalty for buying from far away, so there aren't many factors pushing back from geographic concentration. Add to that concentration in other industries - a market with fewer larger buyers means larger average individual demand than otherwise, which pushes towards larger or more concentrated suppliers.

Loosely, there's a lot of economic push towards concentration, and not a lot pushing against it. Geopolitics usually operates on a slower scale than market pressures, which means we get weird things like a vested interest in Ukrainian national security due to it being the only country bothering to manufacture neon in the world.

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#12

Post by roughly »

jagger27 wrote: post #8
staplers wrote: post #6

Earlier quoted context omitted.

As with chip making, it can be done anywhere but the tools and factories setup to mass produce are concentrated in certain areas. That's just how industry works sometimes. It takes time to setup new supply chains for mass production.

We’re seeing this with lithium. Canada and the US have significant amounts in the ground but the mining and refining infra simply isn’t there. Neon distillation does seem much simpler and cleaner, from my layman perspective.

Mining (and refining) especially tends to come with some nasty environmental effects that we've been quite happy to outsource to other parts of the world with less empowered citizenry (and often cheaper labor).

Rare-earth elements are the same way - they're relatively abundant, but China is enormously over-represented in the market because the west doesn't like mining and China doesn't care.

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#14

Post by Rebelgecko »

atlantas wrote: post #10

90%! Did we really let ourselves become so reliant on Ukraine and Taiwan for computer chips? Taiwan being the next country most under threat. In fact, Reuters just reported that "Taiwan warns Chinese aircraft in its air defence zone" https://www.reuters.com/world/asia-pacific/taiwan-reports-ni...

Doesn't that happen on more or less a weekly basis?

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#15

Post by daniel-cussen »

perihelions wrote: post #2

How is neon extracted and why does one country have a 90% monopoly (in this specific grade)? edit: Found this C&EN story from 2016 that adds context: - "Chip makers, which account for more than 90% of global neon consumption, are already experiencing high prices and some shortages stemming from the Russian conflict with Ukraine, Shon-Roy says. The war, which started in 2014, interrupted global supplies of the gas, ab…

It's funny I was talking to precisely a steelmaker about imports and exporters some time ago: "The American is no patriot, if steel is 30% cheaper in Japan, he will buy it there rather than at home." It looks like, in fact, these Ukranians, also in the steel industry, might actually be doing something patriotic--like people all over the world, America too--and keep the surely very tricky and specific technology to themselves.

It's not unlike German "hidden champions", companies that figured out a niche safe from industrial espionage, usually something involving very precise know-how regarding something analog, and nobody can do it like they can. German hidden champions are generally family-owned, rather than public companies, and prefer it that way; they stay in Germany typically; and there are 300 of them by some reasonable reckoning. They make the critical thing that goes in the thing that goes in the thing.

Taiwan does something similar--they see their chip industry, which is also very dependent on human know-how and highly analog, high precision--as a patriotic endeavor that protects their sovereignty economically and geopolitically.

So, apparently the reason neon comes from Ukraine is some pretty smart Ukrainians wanted it that way, for the good of Ukraine, and specifically for Ukrainian sovereignty to matter to the rest of the world.

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#16

Post by AlanYx »

jagger27 wrote: post #8
staplers wrote: post #6

Earlier quoted context omitted.

As with chip making, it can be done anywhere but the tools and factories setup to mass produce are concentrated in certain areas. That's just how industry works sometimes. It takes time to setup new supply chains for mass production.

We’re seeing this with lithium. Canada and the US have significant amounts in the ground but the mining and refining infra simply isn’t there. Neon distillation does seem much simpler and cleaner, from my layman perspective.

Lithium is a great example. Canada used to be one of the major lithium producers in the 1950s and still has huge deposits, but output has fallen dramatically over the years and actually declined to zero in 2020.

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#18

Post by roughly »

atlantas wrote: post #10

90%! Did we really let ourselves become so reliant on Ukraine and Taiwan for computer chips? Taiwan being the next country most under threat. In fact, Reuters just reported that "Taiwan warns Chinese aircraft in its air defence zone" https://www.reuters.com/world/asia-pacific/taiwan-reports-ni...

But we saved some money by shuttering all our factories and outsourcing everything, so, who's to say what the right answer was.

(/s)

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#19

Post by daniel-cussen »

roughly wrote: post #12
jagger27 wrote: post #8

Earlier quoted context omitted.

We’re seeing this with lithium. Canada and the US have significant amounts in the ground but the mining and refining infra simply isn’t there. Neon distillation does seem much simpler and cleaner, from my layman perspective.

Mining (and refining) especially tends to come with some nasty environmental effects that we've been quite happy to outsource to other parts of the world with less empowered citizenry (and often cheaper labor). Rare-earth elements are the same way - they're relatively abundant, but China is enormously over-represented in the market because the west doesn't like mining and China doesn't care.

Lithium mining is not that nasty. And Tesla for one wants to make it even less toxic. Besides there's just not that much life on the salt flat, yeah flamingos great, and the brine shrimp they eat, but come on. That's one of the meaningful defenses for mining in the Atacama, there's very little life to harm. Much better than mining in the middle of the Amazon, making four species endemic to the orefield extinct, don't you think?

Re: Ukraine is a major producer of neon gas, critical for lasers used in chipmaking

#20

Post by Jiro »

perihelions wrote: post #2

How is neon extracted and why does one country have a 90% monopoly (in this specific grade)? edit: Found this C&EN story from 2016 that adds context: - "Chip makers, which account for more than 90% of global neon consumption, are already experiencing high prices and some shortages stemming from the Russian conflict with Ukraine, Shon-Roy says. The war, which started in 2014, interrupted global supplies of the gas, ab…

Neon is not the main reason they are doing it. It's a byproduct that gives them a little extra profit once they've distilled the air anyway for other reasons. Distilling the air just to get neon wouldn't be profitable.
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