Vicious Circle: War in Iran could lead to Global Chip shortages
When the US and Israeli military planners launched an operation against Iran in February 2026, they had to factor in the surge in oil and gas prices. But looking at the chaotic nature of their actions and the unclear goals that change from day to day, doubts creep in. Anyway, the mutual exchange of blows and the blocking of the Strait of Hormuz not only affected heating systems and gas stations, but also affected the most technologically complex industry of our time — the production of semiconductors. It was not obvious that it also depends on the logistics and energy resources of the burning Middle East, but now it has become clear. The conflict threatens to derail technology corporations' $650 billion investment plans this year and provoke a new round of global chip shortages. Details can be found in the Izvestia article.
Taiwan's Troubles
The epicenter of the semiconductor problem is in Taiwan. The island produces about 90% of the most advanced logic chips in the world. The local company TSMC is the exclusive manufacturer of accelerators for AI models. The problem is that chip manufacturing is an incredibly energy—intensive process. A modern semiconductor manufacturing plant consumes as much electricity as an average megacity.
Taiwan imports 97% of its energy resources, while a special emphasis is placed on liquefied natural gas (LNG) against the background of the abandonment of coal-fired generation. Qatar has historically provided about 37% of LNG supplies to the island. With the Middle Eastern state declaring force majeure on shipments due to military risks in the Strait of Hormuz, Taiwan faced the threat of a physical shutdown of the turbines.
The situation is aggravated by the critically low level of reserves. Unlike South Korea (52 days of LNG reserves) or Japan (21 days), Taiwan's gas storage facilities are designed for only 11 days of consumption. The government is urgently buying LNG shipments on the spot market, where prices have already broken through the $15 mark per million British thermal units (MMBtu), which is almost twice as high as pre-crisis levels.
Morgan Stanley analysts warn that even if a direct blackout can be avoided, a multiple increase in electricity tariffs will inevitably translate into the cost of silicon wafers. TSMC, whose shares have already lost more than 7% of capitalization, will be forced to shift these costs to customers — Apple, Nvidia, AMD, which will trigger a wave of electronics appreciation around the world.
Tariffs went wild
If Taiwan is responsible for "logic", then South Korea is actually a monopolist in memory production. Samsung and SK Hynix control 80% of the high-bandwidth memory (HBM) market, which is critical for AI servers, and 70% of the standard DRAM market.
The South Korean economy has suffered a double blow. The country imports 70% of its crude oil from the Middle East. The energy crisis caused the Seoul stock exchange to collapse by 18% in four days, the worst result since 2008, wiping out half a trillion dollars of capitalization.
Korea's semiconductor clusters have become hostages of their own energy intensity. The megahub under construction in Yongin will require 16 GW of capacity, which is 17% of the country's total peak consumption. With oil trading above $100 per barrel and gas logistics disrupted, the cost of providing these plants with electricity is growing dramatically. Even before the start of the war, electricity tariffs for the Korean industry have increased by 60% since 2020. The current shock is making memory production in Korea extremely expensive, which will inevitably lead to shortages and price increases in the global market, which has already been overheated by the boom in artificial intelligence.
The problem is not limited to electricity alone. Chip manufacturing is a complex chemical process based on certain elements, most of which are mined or produced only in the Middle East.
Semiconductors by cards
The first bottleneck is helium. This inert gas is critically important for cooling during lithography and cleaning of silicon wafers. Qatar provides about 30-35% of global helium production, where the gas is a byproduct of LNG production at the giant Northern field. Blocking the Strait of Hormuz could take up to a third of the world's helium supply off the market. Attempts to cover this deficit through supplies from the United States, Algeria or Russia (Amur Gas Processing Plant) will encounter logistical limitations — helium is transported in special cryogenic tanks, of which there are a limited number in the world. So far, companies (in particular, Hynix) claim that they have the necessary reserves.
Then there is bromine, which is used for plasma etching of microcircuits. About 65% of the global production of this halogen is concentrated in Israel and Jordan (extraction from the waters of the Dead Sea). The transfer of the region to the status of an active combat zone and the destruction of the port infrastructure pose a direct threat of disruptions in the supply of this reagent.
If the shortage of chemicals becomes acute, the factories of TSMC and Samsung will be forced to go to strict rationing. Bloomberg analysts expect manufacturers to start prioritizing the highest-margin AI chips, sacrificing the production of microcontrollers for the automotive and consumer electronics industries. The world risks a repeat of the crisis of 2021, when automakers stopped assembly lines due to a shortage of penny chips.
In a situation where there are already queues for chips due to AI mania, new interruptions do not bring anything good. It is not a fact that even major players will be able to fully ensure supplies at reasonable prices and on time. What can we say about other market participants, as well as ordinary consumers of computer products that are not related to artificial intelligence. For example, buyers of personal computers, especially powerful ones for games, video editing and other complex tasks, who are already experiencing one price crisis after another, are highly likely to receive another unpleasant blow (for example, in light of the news that Nvidia is specifically holding back the production of video cards for the sake of AI chips).
Another story related to semiconductors in one way or another is that the war casts great doubt on the ambitious plans of the Persian Gulf countries to transform themselves into a global hub of artificial intelligence. The UAE and Saudi Arabia have invested tens of billions of dollars in partnerships with Microsoft, OpenAI and Nvidia, building giant data centers powered by cheap local generation.
Iran's attacks on the infrastructure of neighboring countries, which caused disruptions in banks and cloud services, instantly cooled the ardor of investors. Silicon Valley risk managers are urgently reviewing the geography of their investments. Capital will flow to more geopolitically predictable jurisdictions, such as Northern Europe or Southeast Asia, even despite higher electricity tariffs there.
Overall, this conflict highlighted interesting interdependencies. For a long time, there was a concept of a "digital economy" that seemed to be completely disconnected from commodity markets. Now it turns out that the virtual world is very much tied to the real one, since without tankers with Qatari LNG, cylinders with Israeli bromine and pipes of Saudi oil, all this will not work very well.
Note also that by launching a military campaign, the United States has launched a chain reaction that is hitting the technological dominance of the West itself. The rise in the cost of chips and the delay in the launch of data centers will slow down the introduction of AI technologies, accelerate inflation in the consumer sector and hit the economies of key Asian allies — Taiwan and South Korea. Although China is also suffering from the current situation, it has a greater margin of safety, and delays in the supply and development of high-end chips allow China to get closer in the race for both artificial intelligence models and semiconductors.
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