Middle East Turmoil: Materials Shortage, Fuel Price Hike Disrupting Chip Industry

The ongoing war in the Middle East could hamper the supply of key materials, such as helium and bromine, essential for semiconductor manufacturing, and thus significantly impact the AI boom currently driving unprecedented demand for compute and memory chips.

South Korea’s industry ministry has identified 14 items in chip supply chains, including helium and bromine, that are facing severe exposure due to the war in the Middle East. South Korea, home to the world’s largest memory chipmaking duo, is a crucial player in the global semiconductor market, given that Samsung and SK Hynix account for 70% of the DRAM market and 80% of the high-bandwidth memory (HBM) market.

“For now, the impact appears to be limited,” Ray Wang, memory analyst at SemiAnalysis, told CNBC. “A prolonged regional conflict could potentially disrupt chipmakers’ manufacturing operations regarding sourcing materials like helium and bromine.”

In a way, this semiconductor materials crunch is reminiscent of the 2022 shortage of helium and neon triggered by Russia’s invasion of Ukraine. However, the scale and scope of this supply chain hiccup could far outweigh semiconductor-centric materials shortages resulting from the war in Ukraine.

According to Phil Kornbluth, president of Kornbluth Helium Consulting, it’s hard to imagine that the world is not looking at a minimum two-to-three-month shutdown of helium production and a four-to-six-month period before the helium supply chain returns to normal. Qatar’s energy minister echoed similar views, telling the Financial Times that it would take weeks to months for helium deliveries to return to normal, even if the conflict ended immediately.

Helium and bromine crunch

Qatar, which accounts for more than one-third of the world’s helium production, announced a halt to production at its 77 ‌million tons per annum facility on March 2, 2026, after Iranian drone strikes forced it offline. Qatar’s state-owned QatarEnergy produces helium as a byproduct of liquefied natural gas (LNG).

Helium is used to cool silicon wafers during fabrication and is considered to have no viable substitute. Besides maintaining stable temperatures in fabrication equipment, it’s widely used for leak detection. It’s also essential in the photolithography process.

South Korea—where Samsung and SK Hynix are based—could be significantly exposed to a helium shortage. In 2025, South Korea imported 64.7% of its helium from Qatar. However, SK Hynix claims it has diversified its helium supply and secured sufficient inventory.

Iwatani, Japan’s top helium supplier, also claims to have maintained a stable supply to customers, including semiconductor manufacturers, partly because it sources helium from the U.S. and maintains stockpiles in both the U.S. and Japan. Canada and the U.S. are the largest suppliers of helium alongside Qatar.

Next, bromine, another critical element in semiconductor manufacturing, is facing significant supply risks due to the war in the Middle East. Bromine is used in circuit formation and chip inspection equipment.

Approximately two-thirds of the world’s bromine comes from Israel and Jordan. South Korea is currently sourcing 90% of its bromine from Israel. “Global chip manufacturers may need to adjust how they procure these critical materials,” Wang of SemiAnalysis said.

Data center problem

While Amazon’s data centers in the UAE being hit by Iranian drones have been making headlines, a far more consequential issue remains hidden in plain sight. First, if Iran hits data centers in Israel, Qatar, and the UAE, it could significantly impact demand for AI chips, especially when U.S. technology giants such as Microsoft and Nvidia have been positioning the UAE as a regional hub for AI data centers.

Second, rising energy costs may slow the construction of AI data centers, thereby dampening chip demand. AI data centers consume roughly three to five times as much electricity as conventional data centers, so surging oil prices could significantly hike the cost of operating AI data centers. Consequently, it could sharply raise the total cost of ownership for hyperscale data centers and threaten the rollout of AI infrastructure worldwide.

Finally, energy costs are a major factor in semiconductor manufacturing, as fabs operate large cleanrooms that require constant electricity and cooling. Consequently, chipmakers are also vulnerable to fluctuations in global energy prices.

For now, the immediate impact on chip manufacturing is unclear, as large chipmakers such as TSMC typically maintain a mix of suppliers and stockpile specialty gases and chemicals to weather short-term disruptions. But if this war prolongs, pressure on semiconductor supply chains is bound to intensify.

While TSMC doesn’t currently anticipate a notable impact following Qatar’s helium production site going offline, Taiwan’s mega fab acknowledges that it is monitoring the situation. GlobalFoundries, another major fab, has also acknowledged that it is in direct contact with suppliers, customers, and partners in the region and that mitigation plans are in place.

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See also:

Mitigating Geopolitical Risk in Electronics Supply Chain

Helium Shortage Looms Large for Semiconductor Industry

How Business‑Led Diplomacy and Fragile Geopolitics Shape the Transatlantic Tech Ecosystem