SEOUL, March 5 - South Korean political and industry officials say the ongoing U.S.-Israel war with Iran has the potential to interrupt flows of critical materials used in semiconductor manufacturing, raising fresh concerns for a sector that supplies roughly two-thirds of the world's memory chips.
Kim Young-bae, a lawmaker from the ruling party, said after meetings with senior executives from firms including Samsung Electronics and representatives of trade groups that participants discussed the prospect the conflict could push up energy costs and prices for chipmakers if fighting in the Middle East persists.
"Officials raised a possibility that semiconductor production could be disrupted if some of these key materials cannot be sourced from the Middle East," Kim told reporters at a briefing, noting that South Korean companies obtain some essential chip-making materials such as helium from that region.
Helium plays a specific role in heat management during semiconductor manufacturing, and according to industry participants referenced by Kim, it currently has no viable substitution. Production of helium is limited to a small number of countries, with Qatar and the United States among the leading producers named in the conversations.
These warnings arrive as chipmakers already confront acute supply constraints. Demand for chips has surged in part because of purchases from AI data center operators, tightening availability for other device makers across smartphones, laptops and automobiles, the lawmaker and industry executives said.
Companies reacted with varying public statements. SK Hynix issued a statement saying it held sufficient helium inventory and did not expect disruptions in procurement. Samsung Electronics declined to comment. Contract manufacturer GlobalFoundries said it was actively monitoring developments in the Middle East and that "the situation remains fluid, but we are in direct contact with suppliers, customers and partners in the region and have mitigation plans in place."
Potential impact on AI data center projects
Kim also reported that the industry warned the crisis could slow or complicate plans by major technology companies to build AI data centers in the Middle East over the longer term, which could weigh on what has been a strong source of chip demand. The lawmaker cited concerns that security risks and damage to infrastructure might temper the pace of expansion by cloud and AI service providers.
Amazon, for example, said on Monday that some of its data centers in the United Arab Emirates and Bahrain were damaged by drone strikes, a development that has prompted questions about how rapidly Big Tech will expand in the region. The article notes that U.S. technology companies such as Microsoft and Nvidia have been positioning the UAE as a regional hub for the computing power required by AI services like ChatGPT.
Recent escalation
The reporting adds that 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. Industry sources and officials described the security environment as volatile and said they were assessing the implications for supply chains and capital investments in the region.
Executives and trade groups are maintaining close contact with suppliers and customers as they evaluate inventories, logistics and contingency measures. For now, some companies say inventories and mitigation plans reduce the immediate likelihood of procurement disruption, but officials emphasized that the situation could change if the conflict expands or endures.