There’s no doubt about it, the US semiconductor industry is now witnessing unprecedented demands; but it’s not just the chip manufacturers that are feeling the heat, the specialty gas supply chain as a whole is needing support like never before.
Demand for semiconductors in the US is as much as 17% higher in 2021 than it was in 2019, according to the US Department of Commerce, and the majority of on-stream semiconductor manufacturing facilities are operating at or above 90% utilisation, meaning there is limited additional supply to bring online without building facilities.
These strains, however, were already withstanding before the Russia and Ukraine crisis that has continued to affect the world in many different ways. With a significant percentage of the world’s semiconductor-grade neon production derived from Ukraine and Eastern Europe as a whole, concerns for the stability of rare gases supply as the Russian invasion of Ukraine are ongoing.
According to gasworld Business Intelligence, Ukraine was a key supplier for US companies and some sources suggest up to 95% of neon supply to US chip producers comes from Ukraine. However, the issue is bigger now than this when it comes to the US, gasworld understands.
Lack of support for the specialty gas supply chain is quickly becoming the biggest concern in North America right now, as Massachusetts-based Electronic Fluorocarbons explains. “You’re not only looking at the geopolitics crises that are happening and the loss of access to certain materials, but you’re seeing the large end-users planning to double or triple their output – and that impact can be felt in very real ways throughout our industry and by the American consumer,” Caroline Metcalf-Vera, Government Affairs at Electronic Fluorocarbons, told gasworld.
“The education that we’re trying build around this industry wide, is that when you invest billions of dollars at the fab level, at the end user level, and you don’t support the supply chain, the supply chain isn’t going to be able to meet the fabs where they’re at during this rapid pace of growth.”
This issue is a big focus for Metcalf-Vera right now, as she is spending time on Capitol Hill to discuss the importance of the CHIPS Act with members like Senator John Cornyn, Congresswoman Doris Matsui, and Chairman Jim McGovern. The Bill entered the conference period as part of The United States Innovation and Competition Act (USICA) with 107 conferees and hopes to see a final version early this summer. Approved earlier this year, the Act proposes to provide $52bn in funding to boost the US semiconductor market, with up to $5bn of that set to support the supply chain.
With this, Electronic Fluorocarbons is doing all it can to support the passing of the Act and to ensure that the supply chain is not left behind. “There is a lack of knowledge around the intricacies in the supply chain,” Metcalf-Vera explained. “Part of what our conversations explore are what it takes to be a semiconductor supplier.”
“We’re dealing in highly advanced materials where the impurities need to be minuscule, something that the average consumer can’t even begin to imagine. And so, when you’re presenting the market to people that are in charge of making decisions and potentially making a more equal playing field, you need to make sure that they have all of the information that they need to make an informed decision.”
“That being said, the supply chain part of the bill is important and there needs to be access for the advanced material manufacturers in order to ensure that the new fabs built in the US are successful. But right now, the capital isn’t there on the supply chain side of things.”
“If approved, the up to $5bn would be a great start. Obviously, we [the supply chain] would love more, but there are very few companies that are large players. Electronic Fluorocarbons is one of them, and we are 80% of the North American supply chain for multiple products and materials.”
The US semiconductor market: As it stands
A resilient semiconductor supply chain and US semiconductor technology is critical to the US’ national security, critical infrastructure and economy, the Semiconductor Industry Association (SIA) states. Focused on the US semiconductor market, SIA suggests that the US is really losing its leading position in the market, but recognises that this could change with the right support.
As suggested by SIA, the US share of global semiconductor manufacturing capacity has declined from 37% in 1990 to only 12% today. While there is no overriding reason for this shrinking in the market, SIA further suggests that this decline could be due to global competitors, such as those in the Asia Pacific region, investing heavily in manufacturing, while the US has remained quiet with related investments.
gasworld believes that almost half (46%) of the US’ electronics-related gas revenues come from the West Coast region
With incentives in the US having been cut in previous years, the price of being an active player in the market is only continuing to grow. Putting that into figures, it is believed the due primarily to foreign government incentives, the cost of building and operating fabs is 20-40% higher in the US than abroad.
When it comes to the US’ share of the market, however, gasworld Business Intelligence estimates that the semiconductor market brings in approximately $1.1bn of revenue with gas companies in 2021. When broken down into eight regions, gasworld believes that almost half (46%) of the US’ electronics-related gas revenues come from the West Coast region. The next two largest regions for gas sales to electronics customers in the US are the Southeast (11.5%) and the Great Lakes (10%).
Speaking on market trends and predictions Electronic Fluorocarbons is witnessing, Metcalf-Vera added, “There’s a stronghold in the North/Northeast Ohio and New York recently announced semiconductor expansion plans, and then there is heavy strategic investment happening in the Southwest right now with companies such as Intel, Samsung, TI, and TSMC. To be part of the supply chain, you have to be available, you have to be close, and you have to be ready. Where there are new fabs, their supply chain will need to follow.”
Role of high purity gases
As explained by Linde’s Dr. Paul Stockman in a 2018 article for gasworld, gases have been a key enabler of the electronics industry since the first commercial transistors and integrated circuits were produced in the mid-twentieth century. Properties unique to gases have made them the desired materials to build ever more complex devices: easy to transport and store; easy to dispense with precision and accuracy; and most importantly, easier to control desired chemical reactions at the molecular level.
At the core of almost all electronic devices are semiconductors. These are materials that have electrical conducting properties lying between conductors, which allow electrons to freely move, and insulators, which prevent the movement of electrons. The most familiar semiconductor material is elemental silicon, and by adding small amounts of other elements and/or placing it in an electric field, we can regulate the number of electrons moving at any time.
Electronics are built up from semiconductor devices – capacitors, diodes, and transistors – just like the simple breadboard circuits we may have built in science lab, but thousands of times smaller in scale. And just like those simple circuits, these electronics have not only semiconductors, but also conducting wires, with insulators surrounding all the working devices to ensure the electrons move where the circuit engineers intend them.
While some electronics achieve an incredible level of complexity – the latest computer chips are made using more than 1,000 steps and have more than 10 billion individual transistors, all connected by nano-scale wires in intricate, 3D levels of design – they all are made using mostly simple, building block-like processes in use for over 50 years, and are built and shaped using mostly gas materials, Dr. Stockman continued.
The semiconductor shortage, and the gases that are used within the chips, is something gasworld has been following for some time now. Last year, gasworld spoke exclusively with Jim Minicucci, Global Head of the Specialty Gases business field at EMD Electronics, on the semiconductor chip shortage. At the time of publication, Minicucci said, “The chip shortage started with the unprecedented demand for electronics spurred by Covid-19.”
“The pandemic required people to work from home, virtually go to school, shop online. We saw home entertainment activities including online streaming and gaming increase dramatically. This acceleration of a digital economy boosted the demand for PC’s, monitors, smartphones, tablets, and other electronic devices and all these electronic devices need lots of chips.”
“Also, these devices are connected and generate tremendous amounts of data that needs to be processed and stored, which drives infrastructure needs that also use lots of chips. The huge spike in demand coming from every sector outpaced the industry’s production capacity leading to a global scarcity of chips.”