As of right now, there is no path forward in Ukraine. Neither side has expressed the slightest sign of giving in.
For the citizens, it’s an unimaginable tragedy. Those who haven't lost their lives have lost their homes, their businesses, and their sense of safety — possibly forever.
Economically, the effects are spreading to the farthest corners of the globe. Companies thousands of miles from Ukraine and Russia will be facing some very difficult decisions in the next year.
Scarcity of certain ultra-pure gases, of which Ukraine and Russia are some of the world’s top producers, is kneecapping a few critical industries.
Neon in particular is effectively off the market right now. Of the 50% that doesn't come from Ukrainian companies, almost all of it is already bought up in multi-year contracts.
For companies that depend on neon-based lasers to make computer chips, that’s cause for serious alarm.
The spot market for this rare gas is practically nonexistent. The industries that depend on it are waiting with bated breath for the fighting to stop.
But even if the war ends tomorrow, the tension won't.
You Can’t Have One Without the Other
There’s one ironic secret about Ukraine’s neon industry that the media have failed to mention: It can’t survive without Russia’s good graces.
Neon can only be made cheaply when combined with a massive steel industry. Since the air around us only contains a tiny fraction of neon, it needs to be compressed and liquefied before the inert gas can be separated.
As luck would have it, large quantities of liquid air are also needed to make low-carbon steel — and it’s available for a bargain. Russia has been supplying Ukraine with its air supply for as long as the country’s neon factories have been open.
Of course, that mutual back-scratching disappears during active wartime. Putin would much rather hurt Ukraine than profit from the comparatively small neon industry.
But the Russian dictator’s wrath doesn't stop there. Russia is also ensuring that none of its own decently sized neon exports go to any “unfriendly countries.”
You know, like the type that enforce economic sanctions.
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It would almost be comical if it wasn’t such a depressing omen for the world’s economic future.
In case it wasn't already obvious, Russia will continue to be a geopolitical thorn in the world’s side for the foreseeable future.
Putin will continue to attack his longtime neighbors. He will continue to bully the global energy market. And he will almost certainly drive Russia into the ground in the process.
He’s Not Just Hurting the World — He’s Helping China
Taking the Russo-Ukrainian neon industry offline means that its former customers will have to go elsewhere. That’s the type of demand shift that makes opportunists salivate.
Guess which country has the world’s largest steel industry, plus a penchant for world domination?
China could easily steal away that market share, giving it almost complete control over the global semiconductor industry.
That’s terrifying news for the people of Taiwan, who have been fending off China’s own annexation attempts for years now.
Taiwan Semiconductor Manufacturing (TSMC) is the hands-down king of computer chip making. It’s part of the reason China wants to seize control of the country.
Cornering the neon market and becoming the world’s exclusive neon dealer would put Taiwan’s most profitable business in the hands of the Chinese Communist Party.
That should be horrifying for anyone who knows how dangerous a Chinese market monopoly can be.
It’s that very fear that has prompted South Korean chipmakers to do something unexpected.
Starting in 2024, SK Hynix, the largest chip company in the country, plans to produce 100% of its own neon domestically.
Gone are the days when a country in need would simply turn to China for a quick buy. We’re seeing a huge trend of deglobalization and self-reliance ripple throughout the world’s economy.
By building up its own supply, South Korea will never find its chipmakers under China’s thumb.
So What Happens Until Then?
2024 is a long way away, especially while China moves closer and closer to a full takeover.
Until then, I’d recommend reading into companies like these.
Neon is a unique commodity because while everyone can make it, not everyone can make it cheaply.
That’s what makes it particularly susceptible to a Chinese takeover.
Our team of analysts recommend buying into the play listed here. It’s not a neon gas company, as there are only a few of those on the planet.
Rather, it’s a top-tier chipmaker that has gained immunity from the neon shortage through careful planning and rock-solid financials.
It’s one of our newest recommendations but has been on our radar for years. Now is the perfect time to pull the trigger.
To your wealth, Luke Sweeney Luke’s technical know-how combined with an insatiable scientific curiosity has helped uncover some of our most promising leads in the tech sector. He has a knack for breaking down complicated scientific concepts into an easy-to-digest format, while still keeping a sharp focus on the core information. His role at Angel is simple: transform piles of obscure data into profitable investment leads. When following our recommendations, rest assured that a truly exhaustive amount of research goes on behind the scenes..
Contributor, Energy and Capital
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