Ukraine war could worsen chip shortages and jack up phone and car prices in the U.S.

Russia’s attack on Ukraine could push up prices of already in-demand goods, such as cars, phones, and computers.

The conflict’s potential reach could also ripple out and affect staples such as bread. Ukraine is the world’s largest exporter of wheat, and together Ukraine and Russia account for a quarter of global wheat exports.

Already weak supply chains are in danger of further disruption, said Jason Pride, chief investment officer for private wealth with Philadelphia-based Glenmede Trust, which oversees $46 billion in investments.

“Our expectation was that we’d see market volatility. But a lot of the price increases will be passed on to the consumer,” he said. That includes cell phone makers and auto manufacturers already struggling to find semiconductor chips for their factories.

Russia produces 40% of mined palladium and Ukraine makes more than 90% of the world’s supply of neon gas — materials vital to the chip sector.

ASML Holding NV, a Dutch supplier to computer chip makers, is seeking alternative sources for the small amount of neon it uses. Although Ukraine is the world’s biggest producer of neon, ASML told Reuters it obtains less than 20% of the gas from the country.

If the conflict escalates, could Russia retaliate by withholding critical materials needed for U.S. chip production?

It’s possible, said consulting firm Techcet president Lita Shon-Roy.

“Because the conflict may impede exports from Ukraine, neon supply would be immediately impacted,” she said. Moreover, Russia could use palladium exports as leverage against trade sanctions.

Neon electronic gas, critical for lasers used to make chips, is a byproduct of Russian steel manufacturing, according to Techcet. It is then purified in Ukraine. Palladium is used in computer memory.

The White House this month warned U.S. chip manufacturers of just such a supply shortage. Ukraine has plenty of other natural resources, including uranium, titanium, manganese, iron ore, and other commodities.

Susannah Streeter, senior investment and markets analyst at British financial services firm Hargreaves Lansdown, said the invasion holds implications for inflation and interest rate hikes.

“The Fed’s trying to keep a lid on inflation,” Streeter said. “We’re seeing signs that companies are struggling with higher transport costs. This could lead to a ratcheting up of interest rates.”

Meanwhile, David Kotok of Cumberland Advisors in Vineland, N.J., and Sarasota, Fla., said his firm is adding to holdings in defense manufacturers.

“We are overweight in the aerospace-defense sector. We see every reason to continue it,” Kotok said.

The conflict in Europe, plus the potential for China to attack Taiwan, could trigger an increase in U.S. defense spending.

“Footage of tanks makes for TV drama,” Kotok said. “Drones and cyberwarfare are the substance, and the American companies have an expanding role in protecting the Western alliance. We expect the overweight position to remain in place for some time.”

Energy prices should also remain elevated. The European Union relies on Russia for more than a third of its natural gas supply, so those member countries can’t just switch off the pipeline taps.

One market that isn’t rising? Russian stocks.

Sanctions and stock sell-offs don’t worry the Kremlin, said BCA Research’s chief geopolitical strategist Matt Gertken in a webinar Friday.

“[Vladimir] Putin will not avoid conflict for fear of sanctions,” he said, and doesn’t seem to care that the Russian stock market has fallen over 45% this past week.