Geo-Politics & Supply Chain Disruptions

The Russian – Ukraine conflict continues to impact millions of people, inflicting human casualties and destruction. The conflict has also had repercussions on the global economy.

Since the conflict began, we have seen supply chain disruptions in various industries. The disruptions have had global economic ripple effects causing price hikes and shortages of wheat, seed oil, gasoline, steel, palladium, neon, and other critical material.

Although Russia and Ukraine are not key players in semiconductor manufacturing, they are major producers of raw materials that are critical to the industry which adds volatility to an already fragile marketplace.

Close to half of the world's semiconductor-grade neon production was recently halted in Ukraine as the conflict escalates. Neon is used for etching silicon wafers in semiconductor production and its shortage can exacerbate semiconductor shortages and increase the cost of production. According to Reuters, China is the second-largest producer of neon in the world, prices of neon have gone up 9 times since the conflict began adding to the pressures on the semiconductor industry.

Palladium is another product that has been impacted by the Russia – Ukraine conflict. Palladium is a metal used to manufacture critical components such as catalytic converters and is critical in the automotive industry. Russia is a large supplier of rare earth metals such as palladium and since the conflict began prices of commodities such as Palladium have been steadily increasing adding to the challenges the electronic and automotive industry has been facing in the past several years.

The U.S. – China Trade war, the pandemic, and increased natural disasters have stressed supply chains and created shortages in various industries. These events have exposed the complexities, interdependencies, and vulnerabilities present in the electronic manufacturing industry.

Geo-political instabilities, regional turmoil and disruptions in regional economy and infrastructure, have ripple effects on the global economy and our modern interconnected society. They create market scarcity, price hikes, inflation, and eventual economic breakdown within businesses and countries impacting us all.

In the past couple of years, chip shortages have pushed the industry to re-examine the electronic supply chain. Businesses have been looking at manufacturing dependencies, supply chain risks and global vulnerabilities.

The U.S. and European countries have been looking at localization of semi-conductor manufacturing and businesses have been struggling to stay on top of procurement demands and diversifying their suppliers.

But there a deeper interdependencies businesses need to be aware of and that is their supplier’s interdependencies.
Having visibility into the entirety of your supply chain, from your suppliers into your sub-tier suppliers, is critical to operational success.

Having a deep and comprehensive understanding of your manufacturing and supplier dependencies to the level of raw material sourcing will help you take proactive measures in your procurement and production processes. Helping you reduce vulnerabilities within your electronic supply chain and build resiliency within your operational DNA.