On February 24, 2022, Russia invaded Ukraine. Within days, two companies in Odessa and Mariupol — Cryoin and Ingas — shut down their operations. Together, they had been producing roughly 50% of the world’s semiconductor-grade neon. Ukraine as a whole supplied approximately 70% of global neon, 40% of krypton, and 25-30% of xenon — the three noble gases that power the lasers used to etch circuits onto every advanced semiconductor chip manufactured on the planet. Neon prices in China rose tenfold within weeks. Krypton prices in Japan quadrupled. Xenon, which had traded at $15 per liter in 2020, spiked above $100. The world’s most sophisticated industry — semiconductor fabrication — discovered that it was dependent on gases captured from Soviet-era steel mills in a war zone, purified by two mid-sized companies in cities that were being bombed. The concentration wasn’t the result of geological scarcity. Neon, krypton, and xenon exist everywhere — they’re in the air you’re breathing right now. The concentration was an accident of industrial history, and the fact that the accident had never been corrected in three decades of post-Soviet globalization tells you something about how supply chains actually work: nobody fixes a single point of failure until it fails.
What the gases do
Neon, krypton, and xenon are noble gases — chemically inert elements that don’t react with other materials, which is precisely what makes them useful in environments where contamination would destroy the product.
Neon’s critical application is semiconductor photolithography. The excimer lasers used to etch circuit patterns onto silicon wafers — the deep ultraviolet (DUV) systems that still produce the majority of the world’s chips — use gas mixtures that are approximately 96% neon, with small amounts of argon, krypton, fluorine, or xenon depending on the wavelength required. ArF (argon-fluorine) lasers at 193 nanometers and KrF (krypton-fluorine) lasers at 248 nanometers are the workhorses of the semiconductor industry. Every fab that runs DUV lithography consumes neon. The gas mixtures degrade during use and must be regularly replaced. TSMC, Samsung, Intel, and every other chipmaker on Earth — including the Chinese fabs the CHIPS Act was designed to compete against — need a continuous supply of ultra-high-purity neon to keep their lasers firing.
Krypton serves double duty. In semiconductor manufacturing, it’s a component of the laser gas mixtures. Outside the fab, krypton fills the gap between panes in energy-efficient triple-glazed windows — a growing market as building energy codes tighten globally. It’s also used in high-intensity lighting for airports and stadium illumination.
Xenon has the broadest application portfolio of the three. It’s an anesthetic in medicine — safer than nitrous oxide, with faster recovery times, though dramatically more expensive. It fills the flash tubes in high-end photography equipment. It’s used as a contrast agent in CT imaging. And — increasingly — it fuels the ion propulsion systems on communications satellites and Earth observation spacecraft. SpaceX’s Starlink constellation and Amazon’s Project Kuiper are driving xenon demand as satellite constellations proliferate. When a Starlink satellite adjusts its orbit, it’s expelling ionized xenon. The space economy’s growth curve is, unexpectedly, a noble gas demand curve.
Why Ukraine had 70% of global neon
The answer is Soviet military planning. During the 1970s and 1980s, the Soviet Union treated neon as a strategic material for high-powered laser weapons research — the kind of Cold War physics that the Battlefields of the Future course covers from the other side. Every major air separation unit in the Soviet Union was equipped with neon, krypton, and xenon enrichment facilities. Air separation units produce oxygen — which steel mills need in enormous volumes — and the noble gases are captured as by-products of the oxygen production process. The Soviet Union had massive steel mills. The massive steel mills had massive air separation units. The massive air separation units captured massive quantities of noble gases. When the Soviet Union collapsed, the steel mills ended up in Ukraine — particularly in the industrial cities of the Donbas and Black Sea coast — and the noble gas capture equipment went with them.
For three decades, Ukrainian companies collected these gases, purified them to semiconductor grade (99.999% purity for neon), and exported them to the global chip industry at prices that made building competing production capacity uneconomical anywhere else. The same by-product supply structure that constrains indium and tellurium applies here: neon is a by-product of oxygen production, which is a by-product of steelmaking. You cannot produce more semiconductor-grade neon without operating air separation units at steel mills, and the economics of operating those units are determined by steel demand, not neon demand. Ukraine’s dominance wasn’t because Ukrainian neon was better. It was because Ukrainian steel mills had the gas capture equipment installed, nobody else had bothered to install it, and the resulting supply was cheap enough to discourage competition.
What happened after the shock
The predicted catastrophe — fabs shutting down, chip shortages deepening, economic disaster — largely didn’t materialize. The semiconductor industry responded faster than most analysts expected, for several reasons.
First, the major chipmakers had prepared. After neon prices spiked 600% during the 2014 Crimean annexation, TSMC, Samsung, and others diversified suppliers and built strategic stockpiles. Most large fabs had 3-6 months of gas reserves when the 2022 invasion began.
Second, recycling technology scaled rapidly. Modern DUV scanners can recover and purify over 90% of the neon used in each laser pulse, dramatically reducing virgin neon consumption per wafer. TSMC’s neon recycling program became a model for the industry.
Third, new production came online. Linde had invested $250 million in a neon production facility in La Porte, Texas, after the 2014 scare. Chinese air separation companies expanded noble gas capture. South Korean and Japanese producers increased output. By 2023, the acute shortage had eased. Prices retreated from their peaks. The industry congratulated itself on resilience.
Fourth — and this is the detail that changes the long-term picture — the technology is shifting. ASML’s extreme ultraviolet (EUV) lithography systems, which are required for the most advanced 5-nanometer and 3-nanometer chips, do not use neon. EUV lasers vaporize tin droplets rather than exciting noble gas mixtures. As EUV adoption expands and DUV’s share of leading-edge production declines, neon demand from the semiconductor industry will structurally decrease. The gas that nearly crippled the chip industry in 2022 may become less critical to the chip industry by 2030 — not because the supply chain was fixed, but because the technology moved on.
Where it stands in 2026
The noble gas market in 2026 is more diversified than 2022 but still structurally fragile. Ukrainian production has partially recovered — Cryoin’s Odessa facility has resumed operations, though at reduced capacity, and the Mariupol facilities remain destroyed. China, Japan, South Korea, and the United States have all expanded noble gas production and purification capacity. The acute price crisis is over.
But the underlying architecture hasn’t fundamentally changed. Noble gases remain by-products of air separation at steel mills and industrial gas plants. The decision to capture them — rather than venting them into the atmosphere — is discretionary, driven by the economics of the gas market relative to the cost of operating the capture equipment. When neon was $100 per liter, everyone captured it. At lower prices, the incentive weakens. The antimony supply chain showed that price normalization after a crisis doesn’t mean the structural vulnerability has been resolved — it means the market has priced in the assumption that the crisis won’t recur.
Xenon faces its own emerging constraint. Satellite constellation demand is growing faster than xenon supply. SpaceX’s Starlink alone operates over 6,000 satellites, each requiring xenon for station-keeping maneuvers. Amazon’s Kuiper constellation will add thousands more. If the space economy’s xenon demand outgrows the industrial gas industry’s xenon capture, the same by-product ceiling that constrains indium, tellurium, and iridium will constrain the propellant supply for the satellite industry. SpaceX has already begun testing krypton as a cheaper, more abundant xenon substitute in some Starlink applications — a substitution that trades performance for supply security, and that shifts demand pressure from one noble gas to another rather than relieving it.
Why they share a lecture
Neon, krypton, and xenon are the Rare Earth Elements course’s case study in accidental concentration — the supply chain vulnerability that exists not because of geological scarcity or deliberate resource nationalism, but because of industrial inertia. Nobody cornered the noble gas market. Nobody imposed export controls. The Soviet Union installed gas capture equipment at steel mills for laser weapons research. The equipment ended up in Ukraine. Ukraine supplied the world for thirty years. Then a war started and the supply vanished overnight.
The nickel case is about deliberate resource nationalism — Indonesia’s export ban was a strategic decision. The gallium/germanium and antimony cases are about deliberate export controls — China’s licensing regime is an instrument of state policy. The noble gas case is about none of those things. It’s about a supply chain that concentrated by accident, stayed concentrated through inertia, and broke because of a war that had nothing to do with semiconductors. That’s a different category of supply chain risk — one that no critical minerals policy is designed to prevent, because it’s not the result of any policy at all. It’s the result of nobody looking at the map and asking what happens when the cheapest supplier is in a country that borders Russia.
This is the kind of supply chain our Rare Earth Elements course was built to map — where the gases that power every chip laser on Earth were by-products of Soviet steel mills repurposed for Cold War laser weapons, concentrated in two cities in a war zone, and the industry that needed them only found out when the bombs started falling.