War on Iran Raises Concerns Over Global Semiconductor Supply Chain

Escalating conflict involving the United States, Israel, and Iran has raised concerns that the global semiconductor supply chain could face disruptions if the flow of critical materials from the Middle East is affected.

Officials in South Korea warned that semiconductor production may slow if supplies of key materials from the region are interrupted. The concern comes as the conflict entered its sixth day.

South Korea’s chip industry, led by companies such as Samsung Electronics and SK Hynix, produces about two-thirds of the world’s memory chips. Any disruption in material supply could affect production unless alternative sources are secured quickly.

Helium Supply at Risk for Chip Manufacturing

Helium is one of the key materials that could be affected by the conflict. The gas is used in semiconductor manufacturing for heat management, leak detection, and maintaining stable temperatures in fabrication equipment.

Industry officials noted that helium currently has no viable alternatives for many of these functions.

Helium is produced in only a few countries, with Qatar among the leading producers. Around 38 percent of the global helium supply comes from the country.

State energy company QatarEnergy declared force majeure on March 4 after halting gas production and downstream operations due to ongoing attacks.

Downstream facilities process gas into industrial products such as urea, polymers, methanol, and aluminum.

South Korea’s Industry Ministry also said the country depends on the Middle East for 14 additional items used in semiconductor supply chains, including bromine and chip inspection equipment. Some of these materials can be sourced domestically or from other markets, but changing suppliers in semiconductor manufacturing requires testing and validation to meet strict purity standards.

Semiconductor Firms Monitor Situation

Chipmakers said the current situation remains manageable.

SK Hynix said it has secured diverse supply chains and maintains sufficient helium inventories. The company stated there is “almost no chance” its operations will be affected in the near term.

Taiwan-based contract chipmaker TSMC also said it does not expect a significant impact at this stage.

Meanwhile, GlobalFoundries said it is in direct contact with suppliers, customers, and partners in the region and has mitigation plans in place.

Shipping Routes and Energy Prices Add Industry Pressure

The semiconductor industry also faces risks related to shipping routes in the region.

A large share of energy and petrochemical exports from the Persian Gulf passes through the Strait of Hormuz, a key maritime corridor.

If shipping in this corridor is disrupted for a long period, the movement of industrial gases and petrochemicals used in semiconductor production could slow.

The conflict has already pushed global energy prices higher. Brent crude oil, a European benchmark, was priced at about $80 per barrel at the time of publication.

Energy costs are a major factor in semiconductor manufacturing because fabrication plants require constant electricity and cooling to operate large clean rooms. Industry representatives in South Korea warned that a prolonged conflict could increase energy costs, which may lead to higher semiconductor production costs and potentially higher chip prices.

AI Demand and Data Centre Plans Face Uncertainty

The risks come as semiconductor supply chains are already strained by strong demand from artificial intelligence computing.

Rising chip demand from AI data centre operators has tightened supply across industries such as smartphones, laptops, and automobiles.

The conflict could also affect plans by major technology companies to expand AI data centre infrastructure in the Middle East.

Companies including Amazon, Microsoft, and Nvidia have been positioning the United Arab Emirates as a hub for artificial intelligence computing capacity.

Amazon said some of its data centres in the United Arab Emirates and Bahrain were damaged by drone strikes, raising questions about the pace of technology expansion in the region.

PHOTO: UNSPLASH

This article was created with AI assistance.

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