The U.S.-Israel war with Iran could disrupt supplies of key semiconductor manufacturing materials, a South Korean ruling party lawmaker said on Thursday, as the conflict in the Middle East entered its sixth day.
South Korea’s chip industry, which supplies around two-thirds of global memory chips, is also concerned that a prolonged conflict in Iran will lead to higher energy costs and prices, Kim Young-bae said after meeting with executives from companies such as Samsung Electronics 005930.KS and trade groups.
“Officials raised a possibility that semiconductor production could be disrupted if some of these key materials cannot be sourced from the Middle East,” he said at a briefing with reporters, giving helium as one example.
Helium is essential for heat management during semiconductor production and it has no viable alternatives currently. It is only produced in a handful of countries, with Qatar among the leading players in the industry.
The warnings come as chipmakers grapple with severe supply bottlenecks due to surging chip demand from AI data centre operators that has tightened supplies to many other industries, including smartphones, laptops and automobiles.
South Korean chipmaker SK Hynix 000660.KS said in a statement it has “long secured diverse supply chains and sufficient inventory” of helium, “therefore there is almost no chance that the company will be 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 impact currently, and will continue monitoring the situation closely.
Contract chipmaker GlobalFoundries GFS.O said it is “in direct contact with suppliers, customers and partners in the region,” and “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 from other markets.
South Korea’s chip industry also warned the crisis could deal a setback to plans by big tech firms to build AI data centers in the Middle East in the longer term, thus weighing on chip demand, said Kim, the ruling party lawmaker.
Amazon AMZN.O said on Monday some of its data centers in the United Arab Emirates and Bahrain were damaged by drone strikes, sparking questions around Big Tech’s pace of expansion in the region.
U.S. tech giants like Microsoft MSFT.O and Nvidia NVDA.O have been positioning the UAE as a regional hub for artificial intelligence computing needed to power services such as ChatGPT.
Iran launched a wave of missiles at Israel early on Thursday in retaliation for U.S. and Israeli strikes that killed Supreme Leader Ayatollah Ali Khamenei on Saturday.
