How Would a Blockade of the Strait of Hormuz Disrupt the Chip Supply Chain?

The blockade of the Strait of Hormuz is impacting the global semiconductor supply chain across multiple dimensions, from energy and raw materials to chemicals. Asian chip giants such as Taiwan Semiconductor, Samsung Electronics, and SK Hynix are facing rising cost pressures and supply risks.

The Strait of Hormuz carries approximately one-fifth of the world's liquefied natural gas (LNG) shipments, while chip manufacturing hubs like Taiwan and South Korea are heavily dependent on energy imports from the Middle East. According to Bloomberg ship-tracking data, nearly 40% of Taiwan's LNG imports in 2025 came from the Middle East, while about 70% of South Korea's crude oil and one-fifth of its LNG imports also pass through the strait. As the blockade continues, the supply of helium, bromine, sulfuric acid, and various chemical solvents required for chip manufacturing has also been affected, with price pressures continuing to rise.

Currently, major chip manufacturers state that the short-term impact is limited and that they have established certain inventory buffers. However, alarms are escalating. In early April, Taiwan Semiconductor Chief Financial Officer Wendell Huang stated that prices for some chemicals and gases might rise due to the situation in the Middle East, though the impact is currently difficult to quantify. Meanwhile, downstream industries such as gaming consoles, low-end smartphones, home appliances, and automobiles are already feeling the pressure, and the ripple effects of rising chip prices are spreading.

Chip Manufacturing Hubs Heavily Dependent on Middle East Energy Imports

Chip manufacturing is a highly energy-intensive industry. Every one percentage point increase in electricity prices drives up production costs for chip manufacturers and their suppliers.

Taiwan Semiconductor is the primary foundry for the world's most advanced chips, providing contract manufacturing services for NVIDIA, AMD, and Apple. Over 90% of Taiwan's energy relies on imports, with LNG being one of its main sources for power generation. Taiwan Semiconductor CEO C.C. Wei expressed concerns about Taiwan's power supply as early as January this year, stating, "My primary concern is Taiwan's power; I need sufficient electricity to expand capacity without restrictions." The ASML extreme ultraviolet (EUV) lithography machines used by Taiwan Semiconductor are particularly power-hungry when producing advanced chips.

South Korea is also heavily reliant on imported energy, with Samsung Electronics and SK Hynix facing similar risks. Large volumes of Middle Eastern crude oil and LNG are shipped to South Korea via the Strait of Hormuz, and the blockade directly threatens the power and industrial raw material supplies of both countries.

Raw Material Shortages: Helium, Bromine, and Chemical Solvents in Crisis

The impact of the energy blockade extends far beyond electricity. According to Roger Sheng, Vice President of Research at technology consulting firm Gartner, disruptions to oil and gas transportation will cause "breaks in the ultra-long supply chains that include downstream petroleum derivatives."

Helium is currently one of the most concerning shortages. In early March, Qatar Energy suspended operations at the Ras Laffan and Mesaieed LNG facilities, causing a disruption in approximately one-third of the global helium supply. Full recovery could take up to five years. Helium is indispensable in chip manufacturing, used for circuit printing, etching, and wafer stabilization, with demand being particularly prominent for memory chips. Samsung Electronics and SK Hynix therefore face higher risks—about 65% of South Korea's helium comes from Qatar, and about 30% from the United States.

In addition, the supply of high-purity sulfuric acid, used for cleaning wafers and removing photoresist, and high-purity hydrogen bromide gas, used in etching processes, has also tightened due to the blockade. Various chemical diluents used in lithography processes—including propylene glycol methyl ether acetate, propylene glycol methyl ether, and ethyl lactate—are also facing supply uncertainties. Their limited shelf life after opening further increases management difficulties.

Japanese photoresist manufacturers are also deeply affected. Photoresist production is heavily dependent on naphtha, a byproduct of Middle Eastern oil. Chemical giant Shin-Etsu Chemical has refused to issue profit forecasts due to supply disruptions. Japanese Prime Minister Sanae Takaichi stated that domestic naphtha supplies can last until next year.

Responses: Inventory Buffers Buy Time, but Caution Rises

In the face of supply shocks, major chip manufacturers and policymakers have generally remained restrained. Executives from Taiwan Semiconductor, Samsung Electronics, SK Hynix, and Micron have all stated that the short-term impact is limited, and the inventory buffers built in recent years have bought time for diversified procurement.

Kang Hoon-sik, Chief of Staff to the South Korean President, stated in April that South Korean chip manufacturers have stockpiled several months' worth of helium inventory, and there are no major issues in maintaining these stocks. The Bank of Korea also pointed out that bromine and helium inventories are sufficient to cover several months of demand.

Regarding Taiwan Semiconductor, Wendell Huang stated that the company had already sourced raw materials such as helium and hydrogen from multiple regions before the conflict erupted. He expects that the conflict will not have an immediate impact on material supplies, although prices for some chemicals and gases may rise, making the impact difficult to quantify at present. South Korean and Japanese chip manufacturers are sourcing helium from the United States and Canada, paying premiums to ensure priority supply of high-purity gases; Samsung Electronics and SK Hynix have also begun recycling materials such as helium.

Downstream Impact: Consumer Electronics, Automobiles, and AI Investment All Affected

Supply chain pressures have begun to transmit downstream. Gaming console, low-end smartphone, home appliance, and automobile manufacturers are highly sensitive to chip prices. In the event of a shortage, these companies will struggle to gain priority in procurement. Nintendo has already announced a price increase for its newly launched Switch 2 gaming console, despite the risk that this move could suppress demand.

The impact of the naphtha shortage has extended beyond the chip industry itself. Production of modular bathrooms by Japanese sanitary ware manufacturer Toto was once suspended due to this, and the bus division of automobile manufacturer Isuzu Motors was also forced to adjust output.

If the blockade persists, the impact could spread to the AI industry. Gartner's Roger Sheng warned, "This could ultimately dampen AI investment demand, especially funding from Middle Eastern financial backers, casting a shadow over their data center plans."