The US-Israel war with Iran could disrupt supplies of key materials for semiconductor manufacturing, a lawmaker from South Korea’s ruling party said Thursday, as the Middle East conflict entered its sixth day.
South Korea’s chip industry, which supplies about two-thirds of the world’s memory chips, is also worried that a prolonged conflict in Iran will lead to higher energy costs and prices, Kim Young-bae said after meeting executives from companies such as Samsung Electronics 005930.KS and trade groups.
“Officials raised the possibility that semiconductor production could be disrupted if some of these key materials cannot be sourced from the Middle East,” he said in a briefing with reporters, citing helium as an example.
Helium is essential for heat management during semiconductor production and currently has no viable alternatives. It is only produced in a handful of countries, with Qatar being one of the main players in the industry.
The warnings come as chipmakers face severe supply bottlenecks due to rising demand for chips from AI data center operators, which has squeezed supply to many other industries, including smartphones, laptops and cars.
South Korean chipmaker SK Hynix 000660.KS said in a statement that it has “long secured diverse supply chains and sufficient inventory” of helium, “therefore, there is almost no chance of the company being affected.”
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Samsung declined to comment.
Taiwan’s TSMC 2330.TW said in a statement that it did not anticipate any significant impacts currently and will continue to closely monitor the situation.
Contract chipmaker GlobalFoundries GFS.O said it is “in direct contact with suppliers, customers and partners in the region” and that “mitigation plans” are in place.
South Korea’s Industry Ministry said the country relies heavily on the Middle East for 14 other items in chip supply chains, including bromine and chip inspection equipment, but that many of them can be sourced domestically or in other markets.
South Korea’s chip industry also warned that the crisis could represent a setback for big tech companies’ plans to build artificial intelligence data centers in the Middle East in the long term, which would hit demand for chips, said Kim, the ruling party lawmaker.
Amazon AMZN.O said on Monday that some of its data centers in the United Arab Emirates and Bahrain were damaged by drone attacks, raising questions about the pace of Big Tech’s expansion in the region.
American tech giants such as Microsoft MSFT.O and Nvidia NVDA.O have been positioning the UAE as a regional hub for the artificial intelligence computing needed to power services like ChatGPT.
Iran launched a wave of missiles at Israel early Thursday in retaliation for the US and Israeli strikes that killed Supreme Leader Ayatollah Ali Khamenei on Saturday.
