White House warns chip sector to brace itself for Russian supply disruptions

White House is telling the chip sector in the United States to diversify its supply chain in case Russia retaliates against threatened US export limitations by barring access to vital materials.

The threat of reprisal has gained prominence in recent days, with the publication on February 1 of a report by Techcet, a market research firm, showing the reliance of many semiconductor makers on Russian and Ukrainian-sourced elements such as neon, palladium, and others.

According to Techcet estimates, over 90 percent of US semiconductor-grade neon supply originate from Ukraine, while Russia contributes 35 percent of US palladium.

According to the sources, White House National Security Council member Peter Harrell and his staff have been in contact with members of the semiconductor business in recent days, learning about their exposure to Russian and Ukrainian chipmaking materials and pressing them to find alternative sources.

The White House declined to comment on the contents of the conversations, but a senior administration official emphasised that if Russia invaded Ukraine, the administration would be ready.

“Part of that is working with firms to ensure that if Russia takes actions that disrupt supply chains, they are prepared to deal with disruptions,” the source added.

“We recognise that other sources of important products are available and stand ready to assist our companies in identifying and diversifying their supplies.”

According to a copy acquired by Reuters, Joe Pasetti, vice president of global public policy at the chip and electronics manufacturing suppliers organisation SEMI, wrote an email to members this week assessing their exposure to critical chipmaking supplies.

“As discussed on today’s call, please read the attached document… about Russian/Ukrainian production of a number of semiconductor materials,” he said, referring to a Techcet summary of the difficult region’s production of C4F6, Palladium, Helium, Neon, and Scandium. “Please let me know if any of these potential supply disruptions are a problem for your organisation.”