Chipmageddon: Why Sanction Threats Won’t Prevent Russian Invasion

Political News

A broad review of the current global situation reveals that Russia invading Ukraine could set off a worldwide chain of events that could devastate the world’s largest economies and Biden’s threats of sanctions won’t stop that.

So What if Russia Takes Ukraine?

Russia could begin an invasion of Ukraine within days, according to the Biden administration and intelligence sources. Russia issued maritime warnings Friday for the Black Sea area near Ukraine and Russian foreign minister Sergey Lavrov just canceled a planned meeting with Israel that was set for Monday. Add in the fact that Russia announced Saturday that it is drawing down its embassy staff across Ukraine and this looks much less like a military drill and more like impending military action.

So Russia takes Ukraine – so what? Besides the fact that Putin would be invading a sovereign nation (as he did in January of 2014 when he took Crimea from the Ukrainians), why should the rest of the world care?

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Neon and Palladium

More than 90% of neon useable in semiconductor manufacturing by U.S. makers comes from Ukraine and 35% of U.S. palladium, used in alloys for coating chips, comes from Russia, according to Reuters.

Neon, critical for the lasers used to make chips, is a biproduct of Russian steel manufacturing, according to Techcet. It is then purified in Ukraine. Palladium is used in sensors and memory, among other applications.”

Obviously, if Ukraine is under Russian control, so is the neon. And, if the U.S. slaps Russia with tough sanctions, Russia will likely return the favor by cutting the U.S. off from both critical chip-making resources.

A Bad Deed Unpunished

Two of the world’s top three semiconductor manufacturers are located in regions where western antagonists could cause some serious trouble.

source: https://companiesmarketcap.com/semiconductors/largest-semiconductor-companies-by-market-cap/

China Could Follow Russia’s Lead

If Russia goes into Ukraine unscathed by international backlash, China’s Xi Jinping may pull the trigger on his publicly stated goal of unifying Taiwan with China by force. A new energy deal between Russia and China gives Russia revenue to weather any sanctions and China all the energy it could need to weather international backlash for grabbing Taiwan. Once China controls TSMC, what’s the world going to do – sanction themselves into chiplessness?

Kim Jong-un Isn’t Answering the Phone

The Biden administration signaled Friday that another dictator may no longer be interested in playing nice with the international community. When asked by a reporter if White House calls into North Korea had gone unanswered, White House Press Secretary Jen Psaki answered only “correct.”

Kim Jong-un launched a series of missiles into the ocean in recent weeks and North Korea’s state-run press announced that the hermit nation now had a missile capable of reaching the United States. With none of those provocations leading to massive influxes of U.S. cash or goodies, Kim may see Russian and Chinese expansionist successes as the perfect time to unleash hell on South Korea.

Chip-mageddon

Worst case scenario is that Russia takes Ukraine, cuts off neon and palladium for Nvidia and Intel, then China and North Korea go berserk. Just try and find an electronic device after that.

It won’t even matter if China and North Korea succeed, although the world hopes they wouldn’t. Just causing major conflict in Taiwan and South Korea would hamper or stop the production of a resource that is already critically short in supply: semiconducting chips.

Ford and GM have already announced plant slowdowns and shutdowns due to the current silicon shortage. Computer CPUs, memory, and especially graphics processors (GPUs) are hard to get and priced at crisis levels. Losing two of the top three manufacturers could spell disaster for the global economy as everything from dishwashers to doorbells now have chips inside them.

Imagine the mess if your vehicle’s electronic control unit (ECU) dies and a replacement could take 18 months or more to arrive. Or worse, you have an EV and everything has a chip in it so any repair could make you carless for months or years.

Think about the global rush for anything with a chip in it that Chinese aggression will set off. Now magnify that several more times if the North Koreans get antsy.

Manufacturers will suck up every available chip within hours, and consumers will empty online inventory of electronic anything in that same time frame. If you need to replace a broken cell phone, you’ll likely have to turn to the grey or black market where prices will be 4-5 times retail – if you can find them at all.

Factor that into employers that either make or need items with semiconductors in them to function. They won’t be able to and their need for employees will whither. If you thought the Biden supply chain crisis was bad, chipmageddon will be much, much worse.

Don’t bet on it you budding globalist.

Germany, and thereby the E.U., enslaved itself to Russia by becoming dependent on energy from Putin. They’ll bark loudly while fetching Russia’s sticks.

Biden has already told Putin, twice, that the U.S. isn’t going to do anything more than dump some ammo into Ukraine and slap some sanctions on Russia afterward. Neither will stop Russia if Putin is determined to have Ukraine’s major industrial center (remember that neon mentioned earlier), an international airport, and three remaining Black Sea ports.

Sure, the U.S. put 5,000 troops in Poland. Ok, so we’re telling Vladimir that he can have Ukraine and maybe Lithuania, Latvia, and Estonia, but Poland is a step too far… or something. Belarus is already a Russian puppet country.

A Ukraine Invasion Might Not Happen in a Vaccuum

So if you thought a Ukraine invasion really wouldn’t matter that much, keep an eye on Xi and Kim because they are watching how the world treats Vladimir if he decides to continue his remake of the U.S.S.R circa 1980.

But hey, at least putting Biden in office returned a sense of normalcy to the world – late 1970’s normalcy.

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