The closure of the Strait of Hormuz, one of the world's most critical maritime chokepoints, has exposed a vulnerability that extends far beyond oil prices: Taiwan imports about 97% of all of its power, with the Middle East supplying 37% of the fuel that powers Taiwan's electric grid, which runs on liquefied natural gas.
The effective closure of the Strait of Hormuz, normally used to transport about a fifth of the world's oil supply, has forced exporters to cancel shipments and shut production at oilfields, creating the world's biggest ever supply disruption. Yet the threat to Taiwan goes deeper than energy costs. Helium is vital to chip fabrication, as it plays a key role in both cooling and lithography, and Qatar accounts for about one-third of the world's helium supply.
When drone strikes disabled Qatar's Ras Laffan complex on 2 March, the facility went offline, removing approximately 30% of global helium supply from the market. This is not merely a supply chain disruption; it is an immediate operational constraint. Helium is particularly critical for the semiconductor industry because it is used to cool silicon wafers during manufacturing processes, and QatarEnergy accounts for about 30% of global helium production.
The timing could not be worse. TSMC, the world's leading foundry, is on track to use 12.5% of the island's entire electricity output by next year. Taiwan's government has moved quickly to project calm. The Ministry of Economic Affairs said the island has secured LNG for March and April and has adequate power supply despite shipment constraints from Qatar, while officials said local companies can procure helium from multiple sources including the US and Australia, reducing dependence on any single region. Yet the scale of the buffer is thin.
In case of an emergency, Taiwan has only 11 days of LNG reserves. This compares poorly to regional peers. Taiwan relies heavily on seaborne LNG cargoes and holds only around 11 days of reserves, a thin buffer compared with South Korea's storage capacity of at least 52 days and Japan's roughly three weeks of stockpiles. That fragile position now sits at the mercy of a military conflict with no clear resolution path.
Globally, the impact is spreading. Crude, condensate and refined fuels exports from eight Middle Eastern countries in the week to March 15 averaged 9.71 million barrels per day, down 61% from 25.13 million bpd in February. For energy markets, oil price spikes are painful but manageable through strategic reserves. LNG has no equivalent reserve infrastructure and global LNG storage capacity is small relative to the volume of gas that moves through Hormuz daily, so when the flow stops, the buffer runs out fast.
Australia's government has taken a measured approach. According to SBS News, Australia has not been asked by the United States to send a warship to help reopen one of the world's most crucial oil corridors, closed by Iran in response to the US-led war, with Defence Minister Richard Marles saying the government would consider any request through the lens of the national interest.
The counterargument deserves serious consideration. Chipmakers including TSMC have publicly insisted they face no immediate threat. South Korean memory giant SK hynix has since said it had diversified supplies for helium and secured sufficient inventory. Some industry observers note that TSMC said supply chain disruptions are not expected to significantly impact operations for now, though TSMC previously warned in its annual reports that rising electricity prices could increase manufacturing costs. In other words, the real risk may not be sudden collapse but a slow bleed of competitiveness through higher production costs.
The core issue is structural. Taiwan's semiconductor dominance rests on abundant, affordable electricity and reliable access to specialty gases. For three decades, those conditions held because global energy markets were stable and the Strait of Hormuz, though always a geopolitical pressure point, was never actually closed. That assumption has now been tested. If the blockade persists beyond a few weeks, the industry may weather it. If it stretches to months, Taiwan's thin reserves and regional competitors' deeper stockpiles create genuine asymmetries in resilience.
What makes this moment important is not immediate crisis but revealed fragility. Taiwan produces over 90% of the world's most advanced chips. Those chips power every major AI system, military platform, and consumer device on the planet. The island's semiconductor industry was supposed to be its geopolitical insurance policy; making it too important to target. Yet that same importance depends on daily supplies of energy and materials flowing through a 21-nautical-mile chokepoint now controlled by a regime engaged in active warfare with the United States and its allies.
For policymakers and investors, the question is no longer whether Taiwan can survive a few weeks of disruption. It is whether the world can afford to leave its most critical technology hub dependent on stable conditions in the Middle East, where stability is no longer a reasonable assumption.