If the war in Iran drags on, every sector is going to feel the bite, including tech. The key issues will be the supply of raw materials, interest rates, and a possible cyberwar.
Most of the focus has been on petroleum because about a fifth of the world’s supply goes through the Strait of Hormuz in the Persian Gulf, which is effectively closed for now. Much of the world’s chips and electronics are manufactured in China, Taiwan, and South Korea, and these countries are heavily dependent on Gulf energy, including liquefied natural gas for electricity generation.
The reaction has been swift for tech stocks in Taiwan and Korea. The American depositary shares of Taiwan Semiconductor Manufacturing are down 10% since hostilities broke out at the end of last month. Taiwan Semi is the world’s top chip manufacturer and the nexus of all artificial-intelligence progress. It produces the most advanced chips in the world for customers like Nvidia, Apple, and Advanced Micro Devices. And, while it’s diversifying its base of operations, most of its chips still come out of Asia.
A large portion of the world’s memory chips are made in South Korea, where two of the three global giants, SK Hynix and Samsung, are based. Hynix stock was down 14% since the war began, and Samsung shares fell by 15%. The Korean Composite Stock Price index is down 12%.
Petroleum isn’t the only Middle Eastern resource that East Asian chip makers depend on. Helium plays a crucial role in chip making, and Qatar is a key producer, with over a third of 2024 global production, according to the U.S. Geological Survey. Bromine is also an important part of these complex processes, and Israel and Jordan are major producers.
The prices on these resources have already risen, but an extended war may lead to outright shortages, causing East Asian chip factories to run below full utilization. Shortages come at a particularly bad time, since the world’s supply of memory and graphics chips are already in short supply due to soaring demand from AI data centers. Mideast-related shortages would make the AI infrastructure buildout that much more complex.
Meanwhile, the Mideast has become a key source of capital for data centers, meaning economic interruptions in the region could reverberate across the AI landscape. A protracted war in the Middle East is also likely to create inflation throughout the economy, not just in prices directly tied to the conflict. This will keep interest rates elevated, and add to data-center investment costs.
Interest rates are already creeping up. The yield on the benchmark 10-year U.S. Treasury note is up 0.3 percentage points since the war broke out, and any signs of an extended conflict are likely to push long-term rates higher.
Interest rates will also impact the chip makers, who have their own extensive capex planned through 2028, much of it slated for East Asian factory sites.
There are also a few tech stocks that should benefit from an extended war, namely cybersecurity firms like CrowdStrike and Palo Alto Networks. One of the surprising aspects of the war so far is how sparse major Iranian cyberattacks on U.S. commercial targets have been. Symantec, Broadcom’s cyber unit, last month said that one of the major Iranian groups was preparing hacks.
Medical-device maker Stryker saw a significant intrusion this past week that erased many devices on its network. But so far in the war, that has been the only visible commercial attack claimed by an Iranian hacker group.
But if the conflict drags on, U.S. companies may become a battlefield, and the major cybersecurity firms stand to benefit if it does.
Write to Adam Levine at adam.levine@barrons.com
Facts Only
* The war in Iran is impacting global tech supply chains.
* About a fifth of global petroleum supply goes through the Strait of Hormuz.
* Taiwan Semiconductor Manufacturing (TSMC) stock is down 10%.
* SK Hynix stock is down 14%.
* Samsung shares fell by 15%.
* The Korean Composite Stock Price index is down 12%.
* Qatar produces over a third of global helium.
* Israel and Jordan are major producers of bromine.
* Interest rates are increasing.
* Data center investment costs are rising.
* Cybersecurity firms may benefit.
Executive Summary
Full Take
The article presents a high-stakes scenario built on interconnected vulnerabilities, revealing a systemic fragility within the global technological ecosystem. The “motte-and-bailey” pattern is immediately apparent: the initial framing centers on the immediate economic impact of the conflict – oil prices, chip supply – as if this were the primary concern. The narrative then subtly pivots to a potential secondary outcome – an AI infrastructure bottleneck – amplifying the threat to create a more dramatic, and ultimately more concerning, picture. The repeated emphasis on “East Asian chip makers” subtly reinforces a geographically-bound perspective, neglecting the broader global distribution of technological production and consumption. The inclusion of helium and bromine highlights a sophisticated awareness of the intricate dependencies underpinning the semiconductor industry, revealing a level of detail beyond a simple headline. The brief mention of cybersecurity firms benefiting is a classic “false equivalence” – framing a potential positive outcome from a negative situation, obscuring the core issue of supply chain disruption. The lack of discussion regarding potential geopolitical shifts beyond the immediate conflict (e.g., shifts in alliances, trade agreements) suggests a limited scope, a purposeful narrowing of focus. The core paradigm driving this narrative is a risk-averse, supply-constrained worldview—a predictable response to a disruptive event. The unstated assumption is that disruptions *will* occur, and that the consequences will be severe and prolonged.
This paints a picture of a world vulnerable to shocks within complex networks. It’s an opportunity to examine the fundamental question of resilience – not just in terms of economic disruption, but in terms of human agency. Who is truly empowered by this situation? The companies controlling the supply of critical materials? The governments shaping geopolitical outcomes? A key implication is the potential for further escalation, not just in the conflict itself, but in the competition for scarce resources.
Questions arise: What alternative technologies might emerge to mitigate the reliance on specific resources? How might this crisis reshape global trade relationships and accelerate de-globalization? The narrative focuses heavily on immediate consequences, overlooking the longer-term potential for innovation and adaptation.
Patterns detected: ARC-0024 Ambiguity, ARC-0043 Motte-and-Bailey, ARC-0078 Systemic (Supply Chain Vulnerability)
Sentinel — Likely Human
This article analyzes the potential economic consequences of the Iran-Israel conflict on the tech industry, particularly regarding supply chains and interest rates. While the analysis is reasonably detailed, the reliance on unattributed expert opinions and the claim regarding Qatar’s helium production raise concerns about potential synthetic influence.