Chipmakers argued that a crisis between Russia and Ukraine would have a minimal impact on supplies in the short term, but warned that if stricter penalties are imposed, the conflict might lead to higher prices and more problems, according to Reuters.

The countries are important actors in the global chip industry. After Russia launched a military campaign in eastern Ukraine, which proved to be a precursor to a full invasion, a number of chipmakers and sources briefed Reuters about the situation.

According to data from the research company Techcet, Ukraine supplies more than 90% of the semiconductor-grade neon used in chipmaking lasers in the United States. In addition, 33 percent of US palladium, which is used in sensors, memory, and other circuits, originates from Russia, according to the company.

Reuters claimed that semiconductor companies are well prepared due to stockpiling in preparation for the COVID-19 (coronavirus) pandemic, despite the fact that the crisis could be one of the worst to hit Europe in decades.

Should Russia react against sanctions by placing export restrictions on vital materials, the US administration has advised the chip industry to diversify supply chains away from the country.

SK Hynix, Intel, Global Foundries, ASE Technology, and Unisem, among other semiconductor companies, told Reuters that there was no immediate cause for alarm, though an unidentified Japanese chip industry source warned that any future problems with neon and palladium supplies might lead to increased chip pricing.

A representative of the Japanese electronics business Ibiden expressed some reservations but added that the company has sufficient supplies for the time being.

Samsung, Intel, and ASML Holding, which supplies chipmakers such as Taiwan Semiconductor Corp, said they were currently looking into neon replacements.