War on Iran puts global chip supplies and AI expansion at risk

South Korean officials I was warned that The American-Israeli war with Iran It can reach global semiconductors Suppliers If it disrupts the flow of important industrial materials from… The Middle East.

South Korea’s semiconductor sector, led by giants such as Samsung Electronics and SK Hynix, producing approx Two-thirds of memory chips in the world. If Middle East supplies of chipmaking materials are disrupted, semiconductor production could slow unless alternative sources are found quickly.

Helium problem

One of the materials at risk is helium, which is needed in chip manufacturing to manage heat, detect leaks, and maintain stable temperatures in manufacturing equipment. For many of these uses, there is no real alternative.

About 38 percent of the world’s helium It is produced by Qatar, where large extraction facilities are linked to the natural gas industry. This focus means that disruptions can spread quickly across the global supply chain.

The national oil company, Qatar Energy, announced a state of force majeure on the fourth of last March Stopping its gas production and Downstream operations Because of the constant attacks. Downstream facilities convert the gas into other products, including urea, polymers, methanol and aluminium.

South Korea’s Ministry of Industry said the country also depends on the Middle East for 14 other materials in the chip industry, such as bromine and some chip inspection equipment. While some of these materials can be sourced domestically or from other markets, changing suppliers in the semiconductor sector is difficult because chipmakers need to test and validate new sources to meet stringent purity standards.

Companies say the situation is manageable for now. like As reported by ReutersSK Hynix said it has secured diversified supply chains and maintains adequate helium inventories, adding that there is “almost no chance” its operations will be affected in the near term.

Likewise, contract chip maker TSMC said it does not currently expect a significant impact, while GlobalFoundries said it is in direct contact with suppliers and has mitigation plans.

Stuck in transit

Even if gas production resumes in Qatar, the semiconductor industry is vulnerable to disruptions in regional shipping routes. A large portion of global energy and petrochemical exports pass through the Persian Gulf Strait of Hormuza major marine choke point.

If shipping through this corridor is halted for an extended period, it could slow the movement of industrial gases and petrochemicals that chip makers rely on. Disruptions in oil and gas exports from the region have also pushed global energy prices higher: Brent crude, the European benchmark, was at $80 a barrel at the time of publication.

Energy costs are a major factor in semiconductor production. Fabrication plants operate large clean rooms that need constant electricity and cooling, so chipmakers are sensitive to changes in global energy prices. Industry representatives in South Korea have warned that a prolonged conflict could push energy prices higher, which would likely lead to higher semiconductor production costs and possibly higher chip prices.

These risks come at a time when semiconductor supply chains are already under pressure from growing demand from artificial intelligence computing. Demand for chips from AI data center operators has tightened supply across many electronics sectors, including smartphones, laptops and cars.

Long term problem

At present, the direct impact on chip production is unclear. Large chipmakers typically maintain a mix of suppliers, specialty gases and chemicals in stock to help weather short-term disruptions.

But if instability in the region continues, pressure on supply chains is likely to increase. A prolonged conflict that hits energy infrastructure, export facilities, or shipping routes could slowly strain global supplies of materials needed to make chips.

This could delay major technology companies’ plans to expand AI infrastructure in the Middle East. Companies such as Amazon, Microsoft, and Nvidia are working to strengthen the UAE’s position as a center for artificial intelligence computing capabilities.

This story originally appeared on Wired Middle East.