A US-Israeli war with Iran could disrupt supplies of key semiconductor manufacturing materials, South Korea’s ruling party lawmakers said on Thursday, as the conflict in the Middle East entered its sixth day.
South Korea’s chip industry, which supplies two-thirds of global memory chips, is concerned that the 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 have raised the possibility of disrupting semiconductor production if some of these key materials cannot be sourced from the Middle East,” he said in a briefing with reporters, giving helium as an example.
Helium is essential for heat management during semiconductor manufacturing and it currently has no viable alternatives. It is produced in only a few countries, with Qatar among the major players in the industry.
The warnings come as chipmakers face severe supply bottlenecks as chip demand surges from AI data center operators that have tightened supplies to many other industries, including smartphones, laptops and automobiles.
South Korean chipmaker SK Hynix 000660.ks said it has “long-term secure diversified supply chains and sufficient inventory” of helium, “so there is no chance the company will be affected.”
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Samsung declined to comment.
Taiwan’s TSMC 2330.TW said in a statement that it currently does not expect any significant impact and will continue to monitor the situation closely.
Contract chipmaker GlobalFoundries GFS.O said it was “in direct contact with suppliers, customers and partners in the region” and that “mitigation plans” were in place.
South Korea’s industry ministry said the country is heavily dependent on the Middle East for 14 other items in chip supply chains, including bromine and chip inspection equipment, but many of which can be sourced domestically or from other markets.
South Korea’s chip industry has warned that the crisis could face a long-term setback to big tech firms’ plans to build AI data centers in the Middle East, thus weighing on chip demand, ruling party lawmaker Kim said.
Amazon AMZN.O said on Monday that some of its data centers in the United Arab Emirates and Bahrain were damaged by drone strikes, raising questions about the pace of the big tech’s expansion in the region.
US tech giants such as Microsoft MSFT.O and Nvidia NVDA.O have positioned the UAE as a regional hub for the artificial intelligence computing needed to power services such as ChatGPT.
Iran fired a barrage of missiles at Israel early Thursday in retaliation for US and Israeli strikes that killed Supreme Leader Ayatollah Ali Khamenei on Saturday.
(tags to translate)Iran
