After two years of semiconductor chip shortages and supply-chain issues caused by the Covid-19 pandemic, tech and vehicle prices face another knock after Russia’s invasion of Ukraine, says senior economist at Absa CIB Peter Worthington.
With Ukraine and Russia together accounting for 70% of the world’s exports of neon gas, the conflict may impair the supply of critical semiconductor chips, which was only just beginning to settle after the disruptions of the pandemic, he said in a research note on Tuesday .
“But since neon gas is distilled from the air, other suppliers can perhaps fairly quickly set up production capabilities, unlike other key commodities, such as oil, palladium or cobalt, where the available supply is tied to a particular national geography.” Worthington added that new vehicle inflation has been gently rising recently after several years of prints below the average CPI inflation.
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