Crisis in technology due to the war in Ukraine

One of the consequences of the war in Ukraine is the potential crisis in technology that it can cause. Although it may not seem like it, this conflict can completely change the world geopolitics. This is due to the impact it has on the raw materials market.

Since the war began, more than 7.7 million people have been forced to look for shelter in other European countries. While 6.2 million Ukrainians have moved to other areas of the country.

On the other hand, since Ukraine is responsible for producing 15% of the world's corn and 10% of the wheat, the blockade of its exports is generating a world food crisis which is accentuated as time goes by.

However, until now very little has been said about the impact of the war on the technology industry globally. We will now take a look at the changes that are taking place and how they may change the world technology map in the long term.

Why the war in Ukraine can cause a crisis in technology?

The war in Ukraine has the potential to cause a crisis in technology worldwide. Mainly because of the impact it has on the distribution of some of the world's most important raw materials which are strategic for the industry.

It is no secret that, for years, countries like the US, China and Russia have been competing with each other to become the main technological power of the world. However, in order to achieve this, these countries need to secure their supply chain.

If we take into account that before the conflict Ukraine was the supplier of 40% and Russia of 30% of the world's lithium, nickel and neon gas production, we can realize the importance of both regions for the lithium, nickel and neon gas industry. semiconductor and chip manufacturing.

With both countries embroiled in a war, a drop in the production of the raw material can open the door to new producers such as China; and thus turn it into an important source of raw material. the largest supplier worldwide of these components.

Increased tensions between Taiwan and China

If we add to this the increase in tensions between Taiwan and China, the picture does not look good for Western countries. Some analysts say that China will have the capacity to triple the production of technological minerals in all of Europe and double that of the US by 2030, which means a dramatic change in the geopolitics of technology short term.

Due to this, the US government announced in early October a new series of sanctions against China that seek to completely stop the advance of the Asian country in dominating the semiconductor market.

These sanctions prohibit manufacturers from selling chips, semiconductors, and artificial intelligence to the Chinese government, in an effort to wipe out its semiconductor manufacturing industry.

The measures taken have caused massive resignations in Chinese technology companies and further accentuate the problems between China and Taiwan, who are the current leaders in the development and production of semiconductors worldwide.

The impact of war on sustainable energy development

Another market that is being affected by the conflict in Ukraine is the sustainable energy, where nickel and lithium are essential for the manufacture of batteries for electric cars.

During the month of March, the London Metal Exchange was forced to halt its trading in nickel trading due to the volatility that its price was presenting, which increased more than 250% in just two days.

This market instability is mainly due to two reasons. On the one hand, the economic sanctions imposed on Russia have reduced its ability to supply the nickel market, which until then represented 7% of the total produced in the world, causing a reduction in supply.

Second, after the start of the war many investors closed their positions fearing a sudden drop and soon found it necessary to buy back in an attempt to minimize their losses. This sent the price of the metal skyrocketing in a few hours, due to the buying pressure exercised by the market itself.

Once again, this situation ends up benefiting China, which is currently the world's leading leading producer of stainless steel in the world. The second key mineral in the transition to sustainable energy is lithium, so securing its production will ensure an increase in demand for electric cars in the short term.

China currently leads this market and is taking strategic steps to secure its supply chain, such as construction of a lithium plant in the Argentine Republic which, according to plans, will begin production in 2023.

The ICT sector is also affected by the war

In addition to the shortage of technological minerals caused by the war in Ukraine, there are other factors capable of causing a crisis in technology. Firstly, high prices due to market volatility have triggered inflation worldwide, causing a decline in demand for technology products.

As there is less demand, production also decreases and consequently labor recruitment qualified in this sector. Currently, it is estimated that more than 100 IT companies have subsidiaries in Russia and Ukraine and are finding it necessary to reevaluate your business plans in the medium and long term due to the difficulties they face due to the war.

Only last October, the U.S. unleashed its offensive by restricting technology to Chinese companies. Undoubtedly, the response will not be long in coming from the Asian giant, which seeks to reinforce its position as a superpower strongly supported by technology.

These difficulties could extend for a time, accentuating the shortage of semiconductors and a significant increase in the price of different electronic components.

Cyber attacks?

On the other hand, some analysts say that, due to the complexity of modern warfare, some key companies and institutions such as the financial sector, communications companies and public services could be targeted cyber attacks.

Gartner, an information technology research and consulting firm, has published a report forecasting a decline in the PC market. According to experts, the consumer PC market will decline by 13.1% and the commercial PC market by 7.1% this year.

In the following table we can see how Gartner has classified the markets according to the type of device and its behavior in recent years.

Another negative impact of the war on the IT sector is the delay that it is causing in the technology expansion in remote areas of Latin America through the satellites of the OneWeb company.

This company had planned to launch 428 satellites with the help of the Russian Space Agency from the Baikonur space center. Of the 428, approximately 65% have already been put into orbit and the launch of the rest was planned for this year.

However, due to the sanctions imposed on Russia by the European Union, OneWeb was forced to lay off the project. Thus delaying its expansion in Latin America.

A crisis in technology can change the world order

It is a fact that the war in Ukraine can cause a crisis in technology short term. However, the consequences of that crisis can last for a long time, even reaching change the order among the current powers of the world.

The food crisis, inflation and the scarcity of strategic raw materials are just a small sample of the havoc that war can wreak, not to mention the latent threat of the use of nuclear weapons that have the potential to destroy the entire planet.

For now, we can only hope that the conflict is resolved as soon as possible and that it does not escalate to higher levels that represent a global threat to our civilization.

Experience has taught us over the years that war is the main enemy of the development and prosperity of nations. The only solution for the crisis that is causing the conflict is international integration and cooperation.

Today, our priorities should be to stop the war in Ukraine, help countries curb inflation and unite against the pandemic we are facing. If nations unite and cooperate with each other, we will once again have hope for a better world for our future generations.