Iran War and Rising Energy Prices Threaten Chip Demand

The escalating conflict in the Middle East following the U.S. and Israel’s military strikes on Iran on February 28, 2026 has triggered volatility across global energy markets and raised new concerns for the semiconductor industry. Analysts warn that a sharp increase in oil and natural gas prices could raise costs for chipmakers, whose manufacturing processes are highly energy‑intensive.

A key driver of the energy shock is the growing risk to shipments through the Strait of Hormuz, a critical chokepoint for global oil trade. Oil prices quickly climbed above $100 per barrel amid fears of supply disruptions. Higher energy prices could also increase operational costs for data centers and artificial‑intelligence infrastructure, potentially slowing investment and indirectly weakening demand for semiconductors.

Industry officials have also warned about potential supply chain disruptions. In South Korea, policymakers and semiconductor executives have expressed concerns that the conflict could interrupt supplies of key materials used in chip manufacturing. Inputs such as helium—essential for cooling processes during wafer fabrication—could face shortages if regional logistics are disrupted.

While analysts say semiconductor production is unlikely to face immediate shutdowns, the broader economic effects of higher energy and logistics costs could weigh on technology investment. A slowdown in spending on AI data centers and computing infrastructure would ultimately reduce demand for memory chips and other semiconductor components.