Russia’s invasion of UkraineThis could increase the supply of semiconductor chips, which have caused production disruptions worldwide for automakers and tech companies for over a year.

Officials claim that Russia and Ukraine are important suppliers of palladium and neon gas, which are needed to make semiconductor chips.

U.S. neon supply, which is used for lithography processes for chip production, comes almost entirely from Ukraine and Russia, according to Techcet, a California-based market research firm that specializes in critical supply chain materials and components.

According to Techcet, Neon is a product of Russia’s steel production. It then gets sourced from Ukraine and purified there by a specialist Ukrainian company. Since 2014 when Russia invaded Ukraine, neon prices have risen 600%.

Technet estimates that Russia, together with South Africa is the key Palladium supplier and provides 33% of global demand. The automotive industry uses palladium as a catalyst metal. In response to a rally in palladium prices, more than 7 percent was added Thursday. larger surge in precious metals.

Lita Shon Roy, President of Technet, stated that if Russia escalates and the U.S. sanctions Russia more, the supply of neon would be “immediately affected.”

The White House warned chip suppliers earlier in the month to diversify their supply chain to avoid Russia provoking sanctions on U.S. exports.

According to a White House senior official, “Particularly that means working with companies so that if Russia does anything that might disrupt supply chains, businesses are ready for disruptions.”

In the past year or two, there was a worldwide shortage in semiconductor chips, which led to intermittent shutdowns at automotive plants. The supply crunch was expected to ease over the course of this year, according to automakers.

Covid shut down rolling vehicle assembly plant plants early in 2020, which was the source of the current shortage. After the plants were closed, chip suppliers moved the parts to different sectors, such as consumer electronics. These weren’t as affected by the stay-at-home orders.