The price of neon, a rare semiconductor gas that was in short supply due to the Ukraine crisis last year, has hit rock bottom in a year and a half. South Korean neon imports also hit their lowest level in eight years. As the semiconductor industry deteriorates, demand for raw materials falls and supply and demand stabilize.
According to statistics from the Korea Customs Service, the price of imported neon gas in South Korea last month was 53,700 U.S. dollars (about 70 million won), a drop of 99% from the 2.9 million U.S. dollars (about 3.7 billion won) in June last year. U.S. dollar) continued to decline, falling sharply to 1/10. Imports of neon gas also fell sharply. Imports were 2.4 tonnes last month, the lowest level in eight years since October 2014.
Neon is the main material of excimer lasers, which are used in the exposure process of engraving fine circuits on wafers (semiconductor optical discs) using light. It is considered an essential raw material in semiconductor processes, but until 2021 it is completely dependent on imports. So far, South Korea mainly imports neon from Ukraine and Russia, which account for more than 70% of the world’s rare gas production, but the supply chain has been cut off as the Russia-Ukraine war prolongs.
Last year, South Korea’s rare gas imports from China accounted for 80-100% of its total imports. Meanwhile, the price of neon peaked at $2.9 million (about 3.775 billion won) in June last year, up about 55 times from the previous year. “Rare gases are usually stocked up three months in advance, and contracts are signed at fixed prices, so until the middle of last year, there was no big shock,” said an official in the semiconductor industry.
The South Korean government and companies have accelerated the development of indigenous technologies as the price of rare gases soared due to a supply-demand imbalance. Last year, POSCO started producing neon gas at its oxygen plant at the Gwangyang plant. POSCO and TEMC, a company specializing in semiconductor specialty gases, collaborated to develop their own neon gas production facility using large air separators to produce steelmaking gas. The neon gas extracted through this process is refined by TEMC with its own technology, and even made into finished excimer laser gas. The high-purity neon gas produced by the oxygen plant at the Gwangyang Plant is enough to meet 16% of domestic demand. All domestic neon produced in this way was sold.
Semiconductor manufacturers are also increasing the proportion of South Korea’s local rare gases. SK Hynix replaced about 40 percent of its neon gas usage with domestic products last year and plans to increase that to 100 percent by next year. It also decided to introduce domestically produced krypton and xenon gases by June this year. Following the introduction of domestic neon, Samsung Electronics is also cooperating with POSCO to promote the localization of xenon.
With the rapid advancement of South Korea’s localization, the share of rare gases imported from China has dropped sharply. All of the neon gas imported in small quantities last month came from Russia. In addition, prices are expected to temporarily stabilize as the semiconductor industry deteriorated severely from the second half of last year, reducing demand for rare gases such as neon. However, one variable is that Russia, a major importer, extended the ban on the export of rare gases to unfriendly countries including South Korea until the end of this year in response to US sanctions against Russia. “Ukrainian rare gas production plants are still closed and the supply of rare gas from Russia is also unstable,” a KOTRA official said.
Post time: Mar-08-2023
