US-Israel vs Iran War Makes the World Chip Industry Worry, Here's Why!

Illustration of the Epic Fury attack that disrupted the helium supply chain (photo: x @FaytuksObs_TM)

JAKARTA - The crisis triggered by the war between the United States and Israel against Iran, this week, has the potential to disrupt the supply of key materials for the manufacture of semiconductors. This has heightened concerns in the center of the global chip industry, South Korea.

South Korean ruling party lawmaker Kim Young-bae said on Thursday that industry players warned of the risk of production disruptions if key materials could no longer be supplied from the Middle East. The statement came after he met with company executives including Samsung Electronics as well as trade association representatives.

"Officials raised the possibility that semiconductor production could be disrupted if some of these key materials cannot be obtained from the Middle East," Kim said in a briefing to reporters. He added that South Korean companies still rely on certain supplies such as helium from the region.

Helium is not just a party balloon. In chip manufacturing, this gas is crucial for heat management during the silicon wafer production process. Without precision cooling, chips can fail before they are born. The problem is, helium has no viable alternative at the moment and is only produced in a handful of countries, with Qatar and the United States as the main players.

South Korea's chip industry supplies about two-thirds of global memory chips. That means that if the factories there are stalled, the impact could spread to cellphones, laptops, and cars around the world. This happens when the semiconductor supply chain is already under pressure from the surge in demand from AI data centers.

Memory chipmaker SK Hynix said it had sufficient helium supplies and did not expect any supply disruptions in the near future. Samsung declined to comment.

Meanwhile, contract chipmaker GlobalFoundries said it was actively monitoring developments in the Middle East. "The situation is still dynamic, but we are in direct communication with suppliers, customers, and partners in the region and have mitigation plans," the company said in a statement.

The impact is not only on the production side. Kim also said the industry warned that a prolonged conflict could hinder the plans of major technology companies to build AI data centers in the Middle East, which has been one of the engines of chip demand.

Earlier this week, Amazon said that some of its data centers in the United Arab Emirates and Bahrain were damaged by drone attacks, raising questions about Big Tech's expansion in the region. US tech giants such as Microsoft and Nvidia have previously positioned the UAE as a regional AI computing hub to support services such as ChatGPT.

The conflict itself entered its seventh day. Iran launched a wave of missiles at Israel in the early hours of Thursday in response to the US and Israeli attacks that killed Supreme Leader Ayatollah Ali Khamenei last Saturday.