The U.S.-Israel war with Iran could disrupt supplies of key semiconductor manufacturing materials, a South Korean ruling party lawmaker said on Thursday, because the conflict within the Middle East entered its sixth day.
South Korea’s chip industry, which supplies around two-thirds of worldwide memory chips, can be concerned that a protracted conflict in Iran will result in higher energy costs and costs, Kim Young-bae said after meeting with executives from corporations comparable to Samsung Electronics 005930.KS and trade groups.
“Officials raised a possibility that semiconductor production could possibly be disrupted if a few of these key materials can’t be sourced from the Middle East,” he said at a briefing with reporters, giving helium as one example.
Helium is crucial for warmth management during semiconductor production and it has no viable alternatives currently. It is barely produced in a handful of nations, with Qatar among the many leading players within the industry.
The warnings come as chipmakers grapple with severe supply bottlenecks attributable 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 an announcement it has “long secured diverse supply chains and sufficient inventory” of helium, “due to this fact there is nearly no likelihood that the corporate might be affected.”
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Samsung declined to comment.
Taiwan’s TSMC 2330.TW said in an announcement that it didn’t anticipate any significant impact currently, and can proceed monitoring the situation closely.
Contract chipmaker GlobalFoundries GFS.O said it’s “in direct contact with suppliers, customers and partners within 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 lots of them could 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 construct AI data centers within the Middle East within the long run, thus weighing on chip demand, said Kim, the ruling party lawmaker.
Amazon AMZN.O said on Monday a few of its data centers within the United Arab Emirates and Bahrain were damaged by drone strikes, sparking questions around Big Tech’s pace of expansion within 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 comparable to 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.