Iran Crisis Raises Alarm Over Chip Supply, Energy Costs Surge
The ongoing geopolitical tensions involving Iran are triggering fresh concerns within South Korea’s semiconductor industry, as companies fear disruptions in the supply of critical raw materials and a potential rise in global chip prices.
Industry leaders recently expressed apprehension that a prolonged crisis in the Middle East could interfere with the steady flow of essential semiconductor production materials sourced from the region. According to South Korean lawmaker Kim Young-bae, discussions with executives from leading technology firms highlighted the growing risks to the semiconductor supply chain.
Representatives from major companies, including Samsung Electronics, warned that certain key inputs required for chip manufacturing could become harder to procure if instability continues. One material of particular concern is helium, which plays a vital role in temperature regulation during semiconductor fabrication. As helium currently has no practical substitute in advanced chip manufacturing, any disruption in supply could slow production and increase operational costs.
Beyond raw material shortages, industry stakeholders also cautioned that escalating energy prices resulting from the crisis may further inflate semiconductor manufacturing costs. Semiconductor fabrication facilities are energy-intensive operations, and sustained increases in fuel and electricity prices could push chip prices higher globally.
The uncertainty is also raising questions about future investments in artificial intelligence infrastructure in the Middle East. Major cloud and technology companies, including Amazon, Microsoft, and Nvidia, have been expanding data centre capacity in the region to support AI-driven services. However, recent security concerns and damage to some data facilities have added to investor caution.
Meanwhile, South Korean memory chip producers such as SK Hynix have been benefiting from strong demand for AI-related hardware. Yet analysts warn that prolonged instability in the Middle East could disrupt supply chains and delay global data centre expansion plans, potentially dampening semiconductor demand in the longer term.
Source: The Economic Times
