Even as the world focuses on possible disruption in oil supplies because of the ongoing conflict in Iran, another potential area of concern has now been flagged. South Korea's semiconductor industry is expressing significant concerns that the Iran crisis could severely impact its operations, according to a report by Reuters.
A ruling party lawmaker, Kim Young-bae, highlighted these concerns after discussions with executives from major players like Samsung Electronics, the leading chipmaker in the world, as well as industry and trade groups, Reuters said.
Worries Over Helium Supply From Middle East
The primary fears centre on potential disruptions to supplies of critical raw materials sourced from the Middle East, particularly helium. Helium plays an essential role in managing heat during chip production and currently lacks viable substitutes. Any shortages could interrupt manufacturing processes for South Korean firms, which dominate global memory chip production.
While some companies like SK Hynix have stated they hold sufficient helium inventories with no immediate shortfalls expected, supply chain vulnerabilities could be a possibility if the conflict draws on longer. Additionally, escalating energy costs arising from the conflict are expected to drive up overall chip prices.
Anxiety Over Damage To Data Centres
Industry representatives also pointed out longer-term risks. While the Middle East has been positioned as a hub for AI computing by firms like Microsoft and Nvidia, the recent damage to Amazon's data centre facilities in United Arab Emirates and Bahrain reportedly by drone strikes could leave the industry anxious.
The Iran conflict might hinder plans by major tech companies to construct AI data centres in the Middle East. This could further dampen the demand for memory chips that has fuelled recent industry growth, potentially affecting the highly talked about “semiconductor supercycle.”
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