Following the US-Israeli military strikes on Iran beginning 28 February 2026 and Iran's retaliatory actions, global markets have experienced immediate surges in oil and gas prices, widespread disruptions in aviation and tourism, declines in stock markets, and heightened financial volatility. For the semiconductor industry, the shockwaves are only beginning to reverberate through fragile supply chains spanning the Persian Gulf.
The threat is both immediate and structural.According to South Korea's ruling party lawmaker Kim Young-bae, officials raised the possibility that semiconductor production could be disrupted if key materials cannot be sourced from the Middle East, citing helium as one example; helium is essential for heat management during semiconductor production and has no viable alternatives currently, being produced in only a handful of countries with Qatar among the leading players.South Korea's chip industry, which supplies around two-thirds of global memory chips, is concerned that a prolonged conflict will lead to higher energy costs and prices.
The crisis also threatens emerging technology ambitions in the region.Drones struck three AWS data centres over the weekend, two in the UAE and one in Bahrain.The January 2026 Pax Silica initiative brought the UAE and Qatar into a US-led effort to keep advanced semiconductors away from China, with Abu Dhabi's G42 cutting ties with Huawei and aligning with US chip suppliers.South Korea's chip industry warned the crisis could deal a setback to plans by big tech firms to build AI data centres in the Middle East in the longer term, thus weighing on strong chip demand.
Energy represents another pressure point.Electronics manufacturing, from semiconductor fabs to operating reflow ovens to procuring petrochemical-derived materials like plastics and laminates, feels energy cost shifts acutely; everything from PCB substrates to cable insulation begins to rise in cost when petrochemicals become expensive.The Strait of Hormuz handles around a fifth of the world's oil and more than a fifth of its LNG; when tensions escalated, traffic through the strait reportedly dropped by roughly 70% almost immediately.
Logistics add another layer of disruption.With both Hormuz and the already fragile Suez corridor affected, the world is facing what analysts have described as the most severe dual chokepoint crisis in modern shipping history; rerouting ships around Africa adds weeks to transit times and thousands in extra fuel costs, whilst insurance premiums for shipping through the Gulf have soared and in some cases insurers have simply withdrawn cover entirely.
However, the situation is not entirely catastrophic.South Korean chipmaker SK Hynix said it has "long secured diverse supply chains and sufficient inventory" of helium, "therefore there is almost no chance that the company will be affected."Taiwan's TSMC said it did not anticipate any significant impact currently and will continue monitoring the situation closely.South Korea's industry ministry said the country relies heavily on the Middle East for 14 other items in chip supply chains, including bromine and chip inspection equipment, but many of them can be sourced domestically or from other markets.
The central question facing policymakers and industry leaders is whether this conflict resolves quickly or extends indefinitely.If the conflict were to end within weeks, the impact would remain painful but manageable with higher costs, sporadic delays, and temporary shortages; but the Iran conflict touches all disruption vectors at once and unless resolved quickly, 2026 may be remembered as the year the global supply chain crisis returned.
From a fiscal perspective, the timing could hardly be worse. Semiconductor manufacturers are already straining under unprecedented demand from artificial intelligence infrastructure, which has created bottlenecks in the production of memory chips needed for smartphones, laptops, and automobiles. A sustained energy shock, material shortage, and logistics crisis layered onto existing constraints risks triggering a supply-led inflation spike that no policy adjustment can quickly remedy.
Yet the picture is sufficiently complex that blanket pessimism would be misplaced. Major chipmakers have indeed built reserves and diversified their sourcing; the industry is not as fragile as it was during the 2021-23 shortage.Analysts have projected potential global inflation increases and risks of recession if disruptions persist, particularly through closures of key shipping routes like the Strait of Hormuz. That projection depends entirely on duration. A crisis lasting weeks remains manageable; one lasting months would rewrite the economic outlook for 2026. The honest assessment is that nobody yet knows which scenario we are entering, and that uncertainty itself is now a tax on global trade.