‘War hitting noble gases supplies to semiconductor industry’

The semiconductor industry, which is finding its feet back after the pandemic hit the supply chains, causing severe disruptions in supplies, faces yet another challenge in the form of the Ukraine-Russia war.

Sumit Sadana, Executive Vice President and Chief Business Officer of Micron Technology, told BusinessLine that the semiconductor industry faced cost escalations because of the issues relating to the supply of noble gases that were required for the industry.

An increase in oil prices too added to the cost escalations. Asked to quantify the cost escalations, he said it was difficult to quantify. He, however, suggested that the foundries have increased the prices by 15 per cent.

“The war is creating an impact on various aspects of the supply chain that source products from that region. And one example of that is noble gases that are sourced from the region,” he said.

“So there are definitely impacts of the war on the cost structure of the semiconductor industry. The war is also having an impact on the demand side. The consumption of mobile phones, PCs and laptops in that part of the world has been affected because of the war,” he said.

Supply chains getting better

After getting severely hit due to the supply chain issues caused by the pandemic, the semiconductor industry sees a significant improvement on the supply side.

“We’ve already been experiencing some improvements year-on-year. We expect that it will see further improvement by the end of 2022,” Sumit Sadana said.

He, however, said that there were some areas where the shortages would continue into 2023. “But these shortages are far smaller than the extent of shortages that were experienced in the past one year,”

“Network interface cards seem to be in short supply. There is also a shortage of certain power management products and microcontrollers,” he said.

Price assurance model

The company has recently launched a ‘forward pricing’ model where a fixed and declining prices are assured.

“We assure a decline of price over time with the same rate at our cost decline,” he said.

India plans

The company is planning to hire about 1,800 employees for its India operations. In India, where the majority of the 3,200 employees work. “Over the next couple of years, we will have 5,000 employees in our Hyderabad facility. We are moving to a 1.1 million sq facility at Gachibowli in phases,” Anand Ramamoorthy, Vice-President and Managing Director of Micron India, said.

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