ProcurementIQ is monitoring the ongoing situation in Ukraine and will provide updates and analysis on procurement impacts as information becomes available. See the Recent Developments section of our reports for more information.
The Russian invasion of Ukraine is causing disruptions in neon gas exports from Ukraine, which is a critical gas used to manufacture semiconductors. Ukraine provides over 90% of the neon gas used in the United States for semiconductor manufacturing. If Russia gains military control of Ukraine, Western manufacturers may be cut off from Ukrainian neon gas supplies in retaliation for Western sanctions against Russia following the invasion.
Global semiconductor supply chains have been strained by tariffs and the coronavirus pandemic in recent years, and rising neon gas costs would put further upward pressure on semiconductor prices. In response, downstream vendors are expected to raise prices for information technology products and services dependent on computers. However, many semiconductor manufacturers such as Intel and Micron intentionally reduced their reliance on Ukrainian neon gas following the 2014 invasion of Crimea, signaling that chip manufacturers may be more resistant to supply shocks than in the past.
The invasion in Ukraine has raised the risk of cyberattacks from Russia directed toward various Western companies and critical infrastructure systems. Despite these concerns, most cybersecurity events following the crisis have been limited to entities operating in Ukraine. As of March 3rd, no major cyberattacks from Russia were targeted toward major global companies in response to the invasion.
The risk for future cyberattacks remains, as many Western companies have cut Russian entities off from the global economy in compliance with Western sanctions. Visa, Mastercard, and American Express blocked Russian financial institutions from their global payment networks. Similarly, British companies Shell and BP canceled major oil production projects in Russia.
Impacted Markets
- Semiconductors are used to create microchips, which are essential for modern computers and adjacent products listed below. Laptop prices are expected to decline in the next three years, though semiconductor cost increases may slow these price decreases.
- Laptops are the primary tool used to provide a wide variety of professional services. Semiconductor shortages resulting from the invasion are expected to have a muted impact on service markets because vendors can delay the purchase of new laptops until market conditions improve.
- Network router prices are expected to increase modestly in the next three years, and disruptions in the supply of semiconductors may contribute to higher market price growth than currently projected.
- IT consulting companies are expected to experience increased demand for market services as US businesses seek to protect themselves from Russian cyberattacks. This trend is expected to put further upward pressure on rising market prices.
- High competition between consulting vendors is expected to slow the rate of market price increases resulting from the invasion.
- Security software vendors are also expected to experience increased order volumes related to the invasion, especially from smaller US businesses that cannot afford comprehensive IT consulting services, which are typically more expensive than software solutions.
- Rising demand for security software is expected to slow the rate of market price declines during the next three years.
Electric Vehicle Charging Stations
- Electric vehicle charging stations depend on semiconductors to transfer electricity from the charging station to the vehicle.
- US government and private investments in electric vehicle charging stations are expected to rise significantly over the next ten years, raising demand and prices for charging stations and putting additional pressure on semiconductor manufacturers to increase production despite supply chain issues.
