Neon stocks are in focus today as two of the world’s largest suppliers of neon, based in Ukraine, halt operations. The companies produce roughly half the world’s supply of neon, an input in computer-chip production. Investors are keeping a close eye on a number of neon companies in the wake of a potential supply shortage.
So, what’s going on with neon lately?
Well, today Ukrainian companies Ingas and Cryoin have ceased all production as Russia continues its attack on the country. Investors are fearful that the disruption will only perpetuate the semiconductor shortage that has plagued a number of industries over the past few years. Neon consumption used in the production of chips reached roughly 540 metric tons last year. Ingas and Cryoin produce between 45%-54% of semiconductor-grade neon for the world.
Indeed, the chip shortage has driven a number of industries to shore up production dramatically. Currently, it’s unclear how much neon supply chipmakers currently have available and when that supply is expected to run out.
Angelo Zino, an analyst at CFRA, commented on the situation:
“If stockpiles are depleted by April and chipmakers don’t have orders locked up in other regions of the world, it likely means further constraints for the broader supply chain and inability to manufacture the end-product for many key customers.”
A number of neon makers are in the spotlight today as a result of today’s news.
Neon Stocks See Little Gain From Ukraine News
While wheat, oil, fertilizer and solar stocks have seen fair, or in some cases substantial, jumps from Ukrainian production slowdowns, neon companies remain tempered today.
Linde (NYSE:LIN), L’Air Liquide (OTCMKTS:AIQUY), and Air Products and Chemicals (NYSE:APD) are each trading about even so far today, despite seeing a jump in prices pre-market. With that said, the companies are each a bit elevated from Thursday’s roughly 4% jump.
APD is actually slightly in the red today, down roughly 1% heading into afternoon trading. It’s unclear if the companies will see the sorts of gains other industries have reaped from European supply concerns. Many believe the price of neon is set to skyrocket.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
