Conflict Risks Threaten Global Semiconductor Supply Chains Through Middle Eastern Material Disruptions
South Korean government officials have issued a warning that an expanded conflict between the United States, Israel, and Iran could roil the global semiconductor supply chain, should regional unrest interrupt exports of critical industrial materials from the Middle East.
Headed by industry giants Samsung Electronics and SK Hynix, South Korea’s semiconductor sector accounts for roughly two-thirds of the world’s total memory chip output. If shipments of chipmaking raw materials from the Middle East are disrupted, semiconductor manufacturing could slow dramatically unless alternative suppliers can be secured rapidly.
Helium: The Most Vulnerable Critical Input
One high-risk material at the center of concerns is helium, an essential resource for chip manufacturing that supports core functions: heat management, leak detection, and maintaining stable operating temperatures in fabrication equipment. For most of these specialized use cases, there is no viable commercial alternative available today.
Roughly 38% of the world’s total helium supply is produced in Qatar, where large-scale extraction operations are directly tied to the country’s natural gas industry. This extreme concentration of production means any disruption in Qatari output can send immediate shockwaves through global supply chains. On March 4, state-owned energy giant QatarEnergy declared force majeure after halting gas production and all downstream operations in response to ongoing regional attacks. Downstream facilities process raw natural gas into a wide range of products beyond helium, including urea, polymers, methanol, and aluminum.
South Korea’s Ministry of Industry adds that the country also relies on Middle Eastern suppliers for 14 other key chipmaking inputs, including bromine and specialized chip-inspection equipment. While a small share of these materials can be sourced domestically or from other global markets, switching suppliers is notoriously difficult in the semiconductor sector. Chipmakers must conduct rigorous testing and validation of any new source to meet the industry’s strict purity and performance standards, a process that can take months to complete.
For now, major chipmakers report the situation remains manageable. Per Reuters reporting, SK Hynix confirmed it has built a diversified supply base and holds ample helium inventory, noting there is “almost no chance” its operations will be disrupted in the near term. Leading contract chipmaker TSMC echoed that assessment, saying it does not currently anticipate significant operational impacts. GlobalFoundries added that it maintains constant direct contact with suppliers and has pre-built mitigation plans in place to address any disruptions.
Shipping Chokepoints Add Layer of Risk
Even if Qatar resumes full production quickly, the semiconductor industry remains exposed to disruptions in regional shipping routes. Most of the Persian Gulf’s energy and petrochemical exports pass through the Strait of Hormuz, a strategically critical maritime choke point. If shipping through this corridor is interrupted for an extended period, it would slow delivery of the industrial gases and petrochemical inputs that chipmakers depend on to keep fabs running.
Disruptions to the region’s oil and gas exports have already pushed global energy prices higher: as of this publication, Brent crude, the European benchmark, trades at $80 per barrel. Energy costs represent one of the largest expenses for semiconductor manufacturing. Fabrication plants operate massive, climate-controlled clean rooms that require constant electricity and cooling, leaving producers extremely sensitive to shifts in global energy prices.
South Korean industry representatives warn that a prolonged conflict would drive energy prices even higher, likely leading to higher production costs for chipmakers and eventually higher retail chip prices for consumers and businesses. These new risks emerge at a time when semiconductor supply chains are already stretched thin by surging demand from AI computing. Booming chip orders from AI data center operators have tightened supplies across multiple other sectors, including smartphones, laptops, and automobiles.
Long-Term Pressures Will Grow If Unrest Continues
For now, the full immediate impact on global chip production remains unclear. Major chipmakers typically maintain a mix of diverse suppliers and stockpile specialty gases and chemicals to weather short-term disruptions. But if regional instability persists, supply chain pressure will almost certainly intensify.
A drawn-out conflict that damages energy infrastructure, export facilities, or commercial shipping lanes could gradually squeeze the global supply of critical chipmaking materials. This could also delay expansion plans for major technology companies building out artificial intelligence infrastructure in the Middle East, where firms including Amazon, Microsoft, and Nvidia have positioned the United Arab Emirates as a key regional hub for AI computing capacity.
This article is adapted from original reporting originally published by WIRED Middle East.
