Trade War? Russia Restricting Export of Gasses Used to Make Computer Chips

Miguel Daez | June 8, 2022
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In response to a fifth round of sanctions from the European Union (EU) in April, Russia has limited its export of noble gasses in order to strengthen its trade position, the Russian trade ministry said last Thursday according to Reuters.

The noble gasses being targeted include neon, krypton, and xenon, all key ingredients in the manufacturing of semiconductor chips. Because of this, analysts say that Russia could potentially hinder the global production of semiconductors, creating a bottleneck in the market supply. 

This is significant, as semiconductors - known simply as chips - can be found in thousands of products including computers, smartphones, medical equipment, appliances, and gaming hardware.

Russia accounts for 30 percent of the global supply of neon, krypton, and xenon. Ukraine used to be one of the largest producers of noble gasses in the world, but due to the Russian invasion, they had to halt production at their oil plants in the cities of Mariupol and Odessa in March.

This punishment on the rest of the world is a comeback to the fifth round of sanctions the EU has placed on the country, including a prohibition of the transportation of Russian goods on EU roads, banning vessels sailing under the Russian flag to make port in EU countries, as well as a long list of prohibited imports such as coal, solid fossil fuels, jet fuel, quantum computers, software and high electronics. 

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The impact on Russia has been devastating. According to Geopolitical Intelligence Services (GIS), under the pressure of sanctions Russia’s inflation rate is expected to hit 20 percent by the end of 2022. As the biggest producer of oil in the world, the country had to decrease its production by 9 percent in April as compared to March. 

Russian companies and consumers have been significantly affected. According to a Congressional report, Russian companies can’t access necessary supplies and foreign parts as well as goods and services such as western computer software. The real income of the population has dropped 1.2 percent compared to 2021. 

Worst of all for Russia, the targeting of its central bank and the hindrance of its participation in SWIFT (the Society for Worldwide Interbank Financial Telecommunications) has hurled the country into a financial disaster. 

“The sanctions triggered runs on Russian banks, capital flight, and a 60 percent depreciation of the ruble in less than two weeks,” as stated in the Congressional report.

The invading country is weakening, and we don’t know how long it’ll take until it cracks enough so Russia will go to the negotiating table with Ukraine. 

For now, Deputy Trade Minister Vasily Shpak is intent on fighting the trade war. Shpak says the country’s limited export on noble gasses could allow Russia to "rearrange those chains that have now been broken and build new ones."


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