Neon stocks are in focus today as two of the world’s biggest neon suppliers, based in Ukraine, shut down operations. The companies produce about half of the world’s supply of neon, an input in the production of computer chips. Investors are watching a number of neon companies closely following a potential supply shortage.
So what’s going on with neon lately?
Well, today Ukrainian companies Ingas and cryoin ceased all production as Russia continues its attack on the country. Investors fear the disruption will only perpetuate the semiconductor shortage that has plagued a number of industries in recent years. Consumption of neon used in chip production reached about 540 metric tons last year. Ingas and Cryoin produce between 45% and 54% of the semiconductor-grade neon for the world.
Indeed, the shortage of chips has prompted a number of industries to significantly increase their production. Currently, it is unknown how many Neon Chips currently have available and when that supply is expected to run out.
CFRA analyst Angelo Zino commented on the situation:
“If inventory runs out by April and chipmakers don’t have orders blocked in other parts of the world, that likely means additional constraints on the wider supply chain and the inability to manufacture the end product for many key customers.”
A number of neon makers are in the spotlight today following today’s news.
Neon stocks see little gain from Ukrainian news
While wheat, oil, fertilizer and solar energy stocks have seen fair, if not substantial, jumps following Ukraine’s production slowdowns, neon businesses remain subdued today.
Linde (NYSE:LINEN), Air Liquide (OTCMKTS:AIQUY), and Air products and chemicals (NYSE:ODA) are trading roughly so far today, despite a premarket price rally. That said, the companies are each up a bit from Thursday’s roughly 4% jump.
ODA is actually slightly in the red today, down about 1% heading into afternoon trading. It is unclear whether companies will see the kinds of gains that other industries have made from European supply problems. Many believe that the price of neon will skyrocket.
As of the date of publication, Shrey Dua did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.