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· Russian Invasion is Already Impacting AWE Markets
· Semiconductor Projects and Operations will be Heavily Impacted by the Russian Invasion of Ukraine
Russian Invasion is Already Impacting AWE Markets
The price of oil rising to $100/barrel is in part due to the sanctions against the Nord Stream 2 pipeline. Over the last few months the U.S has become the leading gas supplier to Europe. The worry is that the Russian aggression is not a minor or temporary situation but a major ebb in the flow of human history.
Many in the U.S. want to ignore the Ukrainian crisis. But others believe that at the heart lies a fundamental question about the nature of history and the nature of humanity: is change possible? Can humans change the way they behave, or does history repeat itself endlessly, with humans forever condemned to re-enact past tragedies without changing anything except the décor?
Ukraine has been a poster child for the benefits of democratic rule. If it falls there is no assurance that other Eastern European countries will not follow.
The movement in China toward greater authoritarianism and less autonomy for private companies has shaken many of the suppliers of air, water, and energy products. How comfortable does Thermo Fisher feel with China as a major air monitoring research center. What about all the AWE companies which are exporting to Asia from Chinese facilities?
Michael Norris, an analyst with Shanghai-based consultancy AgencyChina said . “We are going to be in a situation where the regulation and the slowdown in China’s economy happen side by side.”
The Russian invasion of Ukraine is coming along with increased trade and collaboration between Russia and China. It is a relatively minor factor in worldwide AWE product sales if Russia is no longer a market. China with the world’s second largest economy is a major factor in the AWE market.
Free trade is clearly the most beneficial environment for a democratic world. But if autocracy is on the rise, then it is a different environment.
Energy Market
In 2021, a large share of Europe’s supply of liquefied natural gas (LNG) originated in the United States, Qatar, and Russia. Combined, these three countries accounted for almost 70% of Europe’s total LNG imports. The United States became Europe’s largest source of LNG in 2021, accounting for 26% of all LNG imported by European Union member countries (EU-27) and the United Kingdom (UK), followed by Qatar with 24%, and Russia with 20%.
In January 2022, the United States supplied more than half of all LNG imports into Europe for the month. Exports of LNG from the United States to EU-27 and the UK increased from 3.4 billion cubic feet per day (Bcf/d) in November 2021 to 6.5 Bcf/d in January 2022—the most LNG shipped to Europe from the United States on a monthly basis to date.
Supply challenges in the European market have led to rising regional prices for natural gas. The natural gas spot price at the Title Transfer Facility (TTF) in the Netherlands—the most liquid virtual natural gas hub in Europe—has been trading at all-time high levels. The TTF price averaged $28.52 per million British thermal units (MMBtu) from September 2021 through the first week of February 2022. The TTF price peaked at $60.20/MMBtu on December 21, 2021. Prior to this sharp price increase, the TTF price had averaged $9.28/MMBtu from January through August 2021, $3.28/MMBtu during 2020, $4.45/MMBtu during 2019, and $6.45/MMBtu from 2014 through 2018.
Oil Prices
There are 5.6 mmbtu/barrel. So oil is pushing $100/ barrel. Prices are well above the break even point for shale extraction in the U.S. However expansion is not taking place for three reasons:
· Shareholders are emphasizing dividends and not expansion.
· The most profitable wells may have already been drilled.
· Costs of production are increasing due to inflation and shortages.
One of the supply problems in Europe is regasification terminal capacity. Germany has none.
Renewables
Europe is already pursuing wind and solar. Drax in the UK is a leader in biomass combustion. Extending the life of some coal plants about to be shut down and using biomass co-firing is one option deserving serious consideration.
Analysis of the world air, water, and energy market is provided in
http://home.mcilvainecompany.com/index.php/markets/air/n064-air-gas-water-fluid-treatment-and-control-world-market
Bob McIlvaine can answer your questions at 847 226 2391 or rmcilvaine@mcilvainecompany.com
Semiconductor Projects and Operations will be Heavily Impacted by the Russian Invasion of Ukraine
Intel, Qualcomm, Nvidia—and other U.S. companies create software that others use to design their own chips. Blocking Russian access to key U.S. design tools and brand name chips could cripple the Russian tech industry. All modern tech, including cars, smartphones and missiles, are dependent on semiconductors supplies.
When the U.S. placed a blockade on chip sales to Huawei, it was TSMC that complied and severed ties with Huawei. This crippled the company. Extrapolating from this one case one can see it is possible to severely damage Russia and reduce its fighting effectiveness.
Another complication is the fact that Russia makes palladium and also makes materials for gases which Ukraine refines and are then used to make semiconductors.
The risk is major damage to the world economy. However since Putin raised the possibility of using his nuclear arsenal, other risks pale by comparison. Many see this as a war between autocracy and democracy which could determine world life quality for many decades.
The Biden administration is planning some semiconductor related sanctions. McIlvaine will be closely following and reporting on the initiative.
The future involvement of China will also be closely followed. Russia and China have forged ties and improved trade relations. China lays claim to Taiwan in much the same way that Putin claims Ukraine.
Taiwan now accounts for 92% of the world's most advanced semiconductor manufacturing capacity. South Korea holds the remaining 8%. China is the only country with influence on North Korea. In a worst case scenario China gains control of all the advanced semiconductor manufacturing and supplies Russia with its needs.
The U.S. government is helping to fund advanced chip making facilities in the U.S. TSMC is building a plant in Arizona. The plant, scheduled to start production of chips in 2024, will enable TSMC’s American customers to fabricate their semiconductor products domestically. It will use the company’s 5-nanometer technology and is expected to create 1,600 jobs and have the capacity to produce 20,000 wafers a month.
IBM has unveiled a 2 nanometer chip which is projected to achieve 45 percent higher performance, than the 7 nanometer chip.
Samsung and TSMC have announced intentions to ramp up their 3nm processes in the second half of 2022.
If NATO countries utilized chips with 45% faster processing capability than Russia, it would be a game changer. So both development of the technology and control by NATO countries could be one of the major tools in preventing autocratic takeovers.
Latest Semiconductor Updates from the Cleanroom Market Report
· Global Semiconductor Sales Increase 23.5% Year-to-Year in November; Industry Establishes Annual Record for Number of Semiconductors Sold
· TSMC Reports Fourth Quarter EPS of NT$6.41
· Global Fab Equipment Spending Projected to Log Record High in 2022 to Mark Third Consecutive Year of Growth, Semi Reports
· Semi Content in Electronic Systems Reached Record High in 2021
· 2022 Semiconductor Sales to Grow 11% After Surging 25% in 2021
· Global Semiconductor Sales Increase 24% Year-to-Year in October; Annual Sales Projected to Increase 26% in 2021, Exceed $600 Billion in 2022
· Samsung Electronics Announces New Advanced Semiconductor Fab Site in Taylor, Texas
· Entegris Expands Investment in Major New Manufacturing Facility in Taiwan
· Global Total Semiconductor Equipment Sales on Track to Top $100 Billion in 2021 for First Time, Semi Reports
· Global Semiconductor Equipment Billings Jump 38% Year-Over-Year In Q3 2021, Log Fifth Straight Quarterly Record, Semi Reports
· Semi Capex on Pace for 34% Growth in 2021 to Record $152.0 Billion
· IC Market Direction Indicator Points to 11% Growth in 2022
Latest Semiconductor Project Updates
· New SPTS Technologies Plant in Newport Set for Go-Ahead
· Intel to Build Computer Chip Factories Amid Global Shortage
· Intel Invests $20B in Two New Ohio Chip Plants
· Silterra to Expand 8-Inch Fab Expansion
· NSF Allots Nearly $18M for Semiconductor Fab
· Japanese Silicon Wafer Maker Sumco Plans $2bn Expansion
· MV EDGE Receives Project of the Year Award for Cree/Wolfspeed Chip Fab Facility
· Intel Breaks Ground in Chandler
Keep up with the latest developments
New cleanrooms will be built to address the political realities. Some projects underway will be expanded or canceled. Cleanroom World Markets with monthly updates provides the latest forecasts for rooms, filters, and garments.
http://home.mcilvainecompany.com/index.php/markets/other/n6f-world-cleanroom-markets
Cleanroom World Projects provides continuing tracking of all the projects in semiconductor, medical devices, pharmaceutical and other industries.
http://home.mcilvainecompany.com/index.php/databases/80a-world-cleanroom-projects
Pharmaceutical Prospects has weekly project and technology news plus profiles of major pharmaceutical companies
http://home.mcilvainecompany.com/index.php/databases/83ai-pharma-prospects
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