As the end of the Middle East conflict appears likely, the electronics and semiconductor industries anticipate a reduction in uncertainties regarding equipment and parts delivery, as well as specialty gas supply and energy costs. This could ease logistical and material procurement burdens.
On June 15, industry sources noted that the electronics sector is focusing on the potential normalization of shipping through the Strait of Hormuz following a ceasefire agreement in the Iran conflict. During the war, the blockade of the Strait and restrictions on shipping led to spikes in international oil prices, maritime freight rates, and insurance costs, exposing the supply chain for equipment, materials, and parts to logistical disruptions and increased costs.
The most immediate benefit expected is a reduction in the uncertainty surrounding the delivery of semiconductor equipment and parts. While high-value semiconductor equipment is often transported by air, modules, consumables, and some chemical materials typically rely on maritime transport and complex logistics networks. Normalization of shipping through the Strait of Hormuz would alleviate waiting times for vessels and the need for detours, as well as reduce war insurance costs. This would lower the risks associated with equipment and parts delivery during new fab investments and maintenance of existing lines.
A reduction in energy costs is also seen as a positive factor. Semiconductor manufacturing plants are known for their high energy consumption, operating 24 hours a day. Significant power is required for wafer processing, cleanroom operations, and cooling systems. If oil and LNG prices stabilize following the end of the conflict, there could be indirect benefits in terms of lower energy procurement and cooling costs. Given the rapid increase in energy demand due to the expansion of AI data centers, stabilizing energy prices would aid overall cost management in the electronics sector.
Concerns about the supply of specialty gases may also diminish. High-purity gases such as helium, neon, argon, krypton, and xenon are essential in semiconductor processes, with helium being particularly critical for wafer processing and equipment cooling. Some specialty gas supply chains are linked to LNG production and transportation networks in the Middle East. Prolonged blockade of the Strait of Hormuz raised fears that disruptions in LNG transport could lead to instability in the supply of gases like helium. If a ceasefire is realized, these concerns may also ease.
However, the key variables affecting the performance of semiconductor companies like Samsung Electronics and SK Hynix remain AI semiconductor demand and memory prices. Demand for HBM, server DRAM, and enterprise SSDs is driving performance improvements. Therefore, it is difficult to view the end of the Middle East conflict as a direct factor for expanding semiconductor demand. Nonetheless, it is significant as a cost-relief factor by lowering procurement costs for equipment and materials, energy expenses, and logistics costs.
The electronics and components sectors also expect relief from logistics costs. Products such as TVs, home appliances, smartphones, and automotive parts rely on global production bases and sales networks. Increases in maritime freight and insurance costs impact the costs and delivery schedules of finished products. Stabilizing oil prices may also eventually reflect in the prices of petroleum-based materials like plastics, films, adhesives, and packaging materials.
However, normalization of shipping does not automatically mean a return to normal costs. The backlog of waiting vessels and port congestion accumulated during the conflict, as well as the reassessment of insurance rates, may take time to resolve. Even after a ceasefire agreement, the actual speed of normalization in Strait shipping, the scope of sanctions relief, and the stability of the Middle East situation will likely determine the extent of cost relief for the electronics industry.
An industry official stated, "Electronics and semiconductors do not reflect the effects of falling oil prices on profits immediately, like the oil and petrochemical sectors. However, it is clear that reducing logistics, specialty gas, and energy cost burdens is a positive factor." The official added, "The speed of actual normalization in maritime transport and the decline in insurance rates after the ceasefire will be critical."
* This article has been translated by AI.
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