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S Korean chip industry fears Iran crisis could raise chip prices
South Korea’s chip industry is concerned that a prolonged Iranian crisis could disrupt supplies of key materials from the Middle East and push chip prices higher due to rising energy costs, lawmaker Kim Young-bae of the ruling party said.
Kim said the crisis could deal a setback to big tech plans to build AI data centres in the Middle East for the longer term, which could weigh on strong chip demand.
Kim added the industry worries that supplies of materials such as helium, essential for heat management in semiconductor production, could be disrupted, and that currently there are no viable alternatives.
Amazon said some of its data centres in the United Arab Emirates and Bahrain were damaged by drone strikes in the Middle East conflict, raising questions about big tech’s pace of expansion in the region.
🔗 Source: Reuters
🧠 Food for thought
Implications, context, and why it matters.
Chipmakers have been preparing for supply shocks for years
- Worries about material shortages have lingered for years in a sector shaped by earlier disruptions.
- Russia’s 2014 takeover of Crimea drove neon gas prices up 600%, pushing chipmakers to adjust 1.
- ASML cut neon use in its industry-standard DUV lithography (deep ultraviolet lithography) machines by 30% to 50%, while SK Hynix stockpiled supplies to build a cushion 1.
- That mix of efficiency gains and supplier spread still guides planning.
- Samsung Electronics and SK Hynix broadened coolant sourcing after 3M’s Belgium plant halted output under a local shutdown order tied to stricter PFAS rules. 3M supplied about 90% of coolant, so both firms sought options in China and picked a new supplier in verification 2.
Data centers have become a new front in geopolitical conflict
- Drone strikes that hit some Amazon data centres in the United Arab Emirates and Bahrain put cloud facilities run by a major U.S. tech firm in the line of fire 3.
- Physical attacks on cloud infrastructure now have a real example.
- The impact weakened two of three Availability Zones (separate facilities designed to reduce outage risk) in Amazon Web Services (AWS)’s UAE region and interrupted service for customers such as Careem and Emirates NBD 4.
- AWS is asking customers to back up data and shift workloads to other AWS Regions outside the Middle East, rather than leaning only on the affected areas 5.
- These events raise doubts about common disaster recovery plans for geopolitical threats, which could slow the Middle East’s push to become a global AI hub 3.
