South Korea's ruling party lawmaker Kim Young-bae stated on Thursday that the country's semiconductor industry is concerned that a prolonged crisis involving Iran could disrupt the supply of critical materials from the Middle East and increase chip prices due to surging energy costs. Kim also indicated that the industry has warned the crisis could hinder major technology companies' long-term plans to build artificial intelligence (AI) data centers in the Middle East, potentially dampening strong chip demand. Kim made these remarks after meeting with executives from several companies, including the world's largest memory chipmaker Samsung Electronics, as well as business and trade groups. At a press conference, he said, "We believe a semiconductor super-cycle has arrived, but data center plans are highly likely to be disrupted, which could impact chip demand." He added, "Executives raised concerns that semiconductor production could be affected if some key materials cannot be procured from the Middle East." Kim noted the industry is worried the Iran crisis may disrupt the supply of certain key chipmaking materials from the Middle East, such as helium. Helium is essential for thermal management during semiconductor manufacturing and currently has no viable substitute. South Korean chipmaker SK Hynix stated in a release that it maintains sufficient helium inventory and does not anticipate procurement issues. Samsung Electronics declined to comment. Industry sources indicated that due to years of geopolitical tensions in the Middle East, chip manufacturers have diversified their material sources, with many also stockpiling raw materials in advance as a precaution. Samsung Electronics and SK Hynix have benefited from soaring memory chip prices, driven by a global race among technology firms to construct AI data centers. Amazon announced on Monday that some of its data centers in the UAE and Bahrain were damaged by drone attacks amid Middle East conflicts, raising questions about the pace of expansion by major tech companies in the region. U.S. tech giants like Microsoft and Nvidia have been working to establish the UAE as a regional hub for AI computing to support services such as ChatGPT.
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