39% of semiconductor leaders think the Russia-Ukraine war will affect supply chain in 2023

Both countries produce materials used in semiconductor production.

The Russia-Ukraine war has haunted multiple industries in 2022, and the semiconductor was no exception. 

According to KPMG's Global Semiconductor Industry Outlook survey, 39% of semiconductor leaders are concerned that the conflict will materially impact the supply chain in 2023.

This is a bigger percentage than those concerned about the war's impact in 2022 (32%).

KPMG explained that this is because there is potential for larger, longer-term impacts to existing from the war "especially of the conflict spears within Europe or other regions."

According to KPMG, Russia produces 35% of the world's palladium supply which is used in plating applications in semiconductor production.

Ukraine, on the other hand, produces 70% of the global supply of neon which is used in the lithography process.

With the supply chain being affected, executives are worried that the war might also affect the industry's revenue growth for 2022 (18%) and 2023 (25%). 

Whilst only the minority seemed to be worried about the war and its effect on the supply chain, it did change the executives' expectations of the semiconductor shortage.

According to the KPMG study, only 83% now believe that the shortage will end by 2023. In Q4 21, 98% felt the same way.

There were about 18% who even believe that the shortage will extend into 2024.

As the conflict continues in Russia and Ukraine, KPMG advised businesses to consider three strategies:

• Onshoring and nearshoring production where possible;
• Diversifying raw material resources; and
• Leveraging data analytics to model disruption, better gauge demand, and manage purchasing.