How the Iran war is raising costs for AI chip companies
The AI rally continued this earnings season. But companies building the key equipment powering the explosion have warned that the Iran war is putting pressure on their supply chains and profitability.
A spiraling conflict in the Middle East has caused oil prices to soar and disrupted supply chains vital to the technology sector. As the stalemate between the US and Iran continues, shortages of key chip-making materials, including helium, are expected.
TSMCproducing Nvidia Chip said the situation in the Middle East could affect its profitability, with some chemical and gas prices likely to rise. FoxconnThe world’s largest contract electronics manufacturer has identified events in the Middle East as a key challenge this year. chip maker infineon He said that precious metal, energy and transportation costs would increase as a result of the war.
IDC analyst Francisco Jeronimo said in a statement to CNBC that the situation of companies may worsen further.
“We can expect further negative impacts this year… gas, energy and freight prices are at an all-time high and will likely remain high for several more quarters even if the situation subsides,” he said. “Even with a potential ceasefire, the damage to the supply side will not heal overnight.”
increasing costs
Supply chain disruption and energy costs are two areas of concern for chip companies amid the Iran war.
Produced primarily as a byproduct of natural gas production, helium is crucial for semiconductor manufacturing. Qatar, which owns some of the world’s largest gas field and is the world’s second-largest supplier, has seen its export capacity constrained by Iranian attacks. According to S&P Global, Qatar provided more than 30% of the market in 2025.
Access to other materials vital to the semiconductor manufacturing process, such as bromine and aluminum, has also been affected. In March, As the war disrupted air transportation, chip buyers in Europe were paying more and turning to replacement stores.
Chip companies “all understand that they need to diversify to be less dependent on one particular region,” Jeronimo said. He added that from a short-term perspective, TSMC is building inventory buffers and diversifying its sourcing.
The Taiwanese chip maker’s strategy is to “continuously develop multi-source supply solutions to build a well-diversified global supplier base and enhance the domestic supply chain,” Chief Financial Officer Wendell Huang said in an earnings call in April.
VAT GroupThe company, which supplies parts to chipmakers, said it had experienced disruptions in its supply chain and had to reroute shipments of goods to customers as a result of the war. While the company stated that it does not expect a significant impact on the general outlook for 2026, it reported that sales in the company’s first quarter decreased by 20-25 million Swiss francs (from $25.5 million to $32 million).
Prolonged conflict concerns
Rising energy costs are the “most serious” problem for manufacturers and factories right now, William Blair analyst Sebastien Naji told CNBC.
But the longer the conflict in the Middle East drags on, “the more significant the impacts on second- and third-order component costs, vendor margins, and the overall AI data center economics,” he added.
Supply chain impacts and rising costs emerging this corporate earnings season could be the beginning of headwinds if the U.S.-Iran impasse continues.
“If the blockade continues through the summer, we are more likely to reconsider the risks and impacts in future earnings seasons,” Naji said. he said.
As of Monday, there was no sign that the United States and Iran were any closer to reaching an agreement as the US President Donald Trump stepped up threats against Tehran on Sunday.
Japanese semiconductor test equipment manufacturer cutting edge It said in its earnings that “the business environment surrounding the company remains unpredictable” due to “concerns that rising tensions in the Middle East could potentially lead to a slowdown in the global economy.”
The company said that although the direct impact on earnings is currently limited, some costs, including logistics, have already been incurred and supply chain shortages may arise.
But so far, the AI boom is keeping investors cautious and stocks are continuing to rise.
“Any disruptions experienced so far have been overshadowed by the rise in investors’ confidence in artificial intelligence,” Michael Field, Morningstar’s chief equity strategist, told CNBC, pointing out that chip companies have made big gains in recent weeks. he said.
Nasdaq PHLX Semiconductor Industry Index The company, which includes the 30 largest U.S.-listed chip companies, is up 41% in the past three months.
Shares of the Philadelphia SE Semiconductor Index over the past three months.
“Companies to be insulated [against impacts from the Iran war] Those with safety stock, diversified sourcing and pricing power over production capacity,” Jeronimo said.
“Everyone else will be under increasing cost pressure for the rest of 2026.”
