Taiwan’s TSMC, the world’s largest contract chip manufacturer, is looking to secure supplies and build up capacity for domestic production of neon gas, following market turmoil caused by Russia’s invasion of Ukraine. Ukrainian companies’ ability to produce those gases wane after Russian invasion destroyed noble gas production capacities. TSMC is in talks with several gas suppliers to explore the possibility of producing high-purity neon gas in Taiwan in three to five years. TSMC requires steady and high-volume supply of materials to meet customer demand.

As part of an effort to make its supplies more secure, TSMC is looking to localize part of its supply chain, particularly the production of neon gas. Neon is typically a byproduct in steelmaking.

The company said it doesn’t have a plan to localize all supply chain as that would not be realistic and would be costly.

Earlier this year TSMC faced major turmoil after Russia destroyed Cryoin and Ingas, two major producers of high-purity neon in the first days of its invasion. These two companies shipped 360,000 cubic meters of high-purity Grade 5.0 neon last year and 75% of their output went to chipmakers. They controlled around half of semiconductor grade neon in 2021.

ArF immersion lasers used to make sophisticated chips that require deep ultraviolet (DUV) lithography use a mixture of neon, fluorine, and argon gases. While each ArF/DUV scanner does not consume a lot of gases, there are tens of thousands of such scanners in use worldwide so demand for these noble gases is strong.

TSMC’s revenue has been keeping up despite demand for semiconductors has been slow due to risks of global recession. While demand for chips is slowing right now, TSMC’s revenue continue to increase. The company posted a $6.673 billion revenue in October, 56.3% more than its revenue in October 2021 ($4.267 billion).