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The United States, Israel, and Iran are entering their third week of conflict , one that has created a deadly new chokepoint at the Strait of Hormuz. Ships that usually carry large amounts of oil and LNG through this trade route are now blocked. As a result, Taiwan — the global hub for the world's most important and high-end chips — is on the verge of facing an energy and materials crisis, according to Bloomberg .
Taiwan is heavily reliant on foreign resources for its energy needs; the country imports about 97% of all of its power. The Middle East supplies 37% of the fuel that powers Taiwan's electric grid, which runs on liquefied natural gas (LNG). This electricity is then used by the island's chipmakers, like TSMC, whose fabrication plants have enormous power appetites and require a continuous, stable supply to operate.
On the other hand, helium is vital to chip fabrication, as it plays a key role in both cooling and lithography. Qatar, Iran's maritime neighbor, accounts for about one-third of the world's helium supply. Taiwan does not produce any of its own helium and imports it from the United States and Qatar, which are abundant in natural gas fields. Therefore, any tension in the Gulf region can affect semiconductor manufacturing .
You may like The ongoing Strait of Hormuz blockage will impact the semiconductor and AI industries with Aluminum, Helium and LNG shortages Qatar helium shutdown puts chip supply chain on a two-week clock Ongoing trade war has TSMC and Taiwan stuck between a rock and a hard place Go deeper with TH Premium: Chipmaking
A deeper look at the chipmaking supply chain
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/global-chip-supply-chain-under-threat-as-us-iran-conflict-enters-third-week-strait-of-hormuz-blockade-is-days-away-from-crippling-taiwans-semiconductor-industry#main
- https://www.tomshardware.com/subscription
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Informational only. No financial advice. Do your own research.