Geopolitical tensions in the Middle East, specifically the conflict between the US and Iran, have triggered a crisis in the Strait of Hormuz, leading to underestimated energy-related impacts on the global semiconductor supply chain. On March 5, Qatar's Ras Laffan natural gas plant, which supplies approximately one-fifth of the world's liquefied natural gas (LNG), announced a production halt and suspension of supplies. Concurrently, as shipping risks escalate in the Strait of Hormuz, the supply chain for critical raw materials used in chip manufacturing, such as helium, has begun to experience volatility. These developments are set to directly affect supplies to South Korea and Taiwan.
South Korea produces over half of the world's memory chips, while Taiwan manufactures 70% of advanced logic chips. Both regions are heavily dependent on Qatari LNG. Crucially, helium, a core industrial gas essential for semiconductor manufacturing, is primarily extracted during the LNG production process. Helium is a rare inert resource often referred to as a "golden gas." In semiconductor manufacturing, its high thermal conductivity is critical for temperature control during wafer fabrication, lithography, and etching processes, and it currently has no viable substitute.
Currently, South Korea's LNG reserves are sufficient for less than two months. After in-transit vessels are unloaded in early April, if the Strait of Hormuz remains obstructed, resulting power supply pressures could directly threaten production at chip fabrication plants. Helium inventories are also limited. Data from the Korea International Trade Association shows that 64.7% of South Korea's helium imports in 2025 came from Qatar, representing the highest dependency rate globally.
South Korea's Ministry of Trade, Industry and Energy has urgently launched an investigation to assess supply risks for 14 types of semiconductor materials and equipment that are highly dependent on the Middle East. To prevent the situation from worsening, major South Korean chipmakers like Samsung Electronics and SK Hynix have initiated comprehensive checks on their helium inventory status. SK Hynix stated that it has diversified its helium supply channels and maintains sufficient inventory, though it did not disclose specific days of coverage. Taiwan Semiconductor Manufacturing indicated that it "does not currently foresee a significant impact" but is closely monitoring the situation.
Industry insiders in South Korea point out that finding alternative helium suppliers in the short term will be challenging. According to data from Boston Consulting Group and the Semiconductor Industry Association, South Korea and Taiwan together account for 36% of global semiconductor production capacity. Any disruption to the helium supply could trigger a chain reaction. Helium consultant Phil Kornblut warned that if the supply disruption from Qatari facilities lasts more than two weeks, the global industrial gas supply chain would face a systemic restructuring. A prolonged closure of the Strait of Hormuz could prevent over 25% of the world's helium from being exported. Should the supply chain be interrupted, recovery could take four to six months.
The industry notes that the Middle East holds a pivotal position in the global semiconductor supply chain. While the current impact is still limited, a protracted conflict could lead to supply disruptions, particularly affecting the procurement of critical materials like helium and bromine, potentially forcing chipmakers to adjust their supply models. Beyond helium, bromine is also seen as a potential risk adding pressure to the local semiconductor industry. High-purity hydrogen bromide (HBr) is commonly used in the polysilicon etching process for manufacturing DRAM and NAND flash memory. South Korea's Ministry of Trade, Industry and Energy identified bromine as one of 14 key materials in the semiconductor supply chain with high dependency on the Middle East, though its impact is considered less significant than helium's, as related products can be sourced from other markets.
In addition to raw material supply concerns, soaring energy costs also threaten the semiconductor industry. AI data centers consume three to five times more electricity than conventional data centers. Given the United States' heavy reliance on crude oil, rising oil prices could substantially increase operational costs, thereby weakening the incentive for investment in AI infrastructure. If energy and raw material costs rise simultaneously, demand for AI memory chips could potentially decline.
South Korean manufacturers are under particular scrutiny. Samsung and SK Hynix are the world's top two memory chipmakers and are indispensable core suppliers for AI data centers. Over the past nine months, memory prices have surged, driven by AI demand, leading to significant profit increases for both companies. However, the shadow of cost pressures and potential demand softening is gradually emerging. Some analysts note that while Samsung and SK Hynix have secured full-year supply contracts for High Bandwidth Memory (HBM), ensuring short-term production stability, a prolonged conflict in the Middle East could hinder AI infrastructure development and depress prices for traditional DRAM not protected by long-term contracts, ultimately affecting corporate profits. If rising costs, material shortages, and weakening prices occur simultaneously, the market's high valuations for these two companies could face downward pressure.
Comments