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The AI rally continued this earnings season. But companies building the underlying hardware powering the boom warned that the Iran war is putting pressure on their supply chains and profitability. A spiraling conflict in the Middle East has seen oil prices skyrocket and supply chains crucial to the tech sector hamstrung. Shortages of key chipmaking materials, including helium, are expected as the U.S. and Iran remain locked in a standoff. TSMC , which manufactures Nvidia chips, said the situation in the Middle East could impact its profitability, with prices for certain chemicals and gases likely to increase. Foxconn , the world's largest contract electronics manufacturer, singled out events in the Middle East as a key challenge this year. Chipmaker Infineon said costs would rise for precious metals, energy and freight as a result of the war. The companies' situation could get worse, Francisco Jeronimo, analyst at IDC, told CNBC. "We can expect further negative impact this year...the price of gas, energy and freight are at an all-time high and are likely to remain high for a few more quarters, even if the situation de-escalates," he said. "Even with a potential ceasefire, the supply-side damage doesn't improve overnight."
Rising costs
Supply chain disruption and energy costs are two areas of concern for chip companies amid the Iran war. Helium, which is mainly produced as a by-product of natural gas production, is crucial to semiconductor manufacturing. Qatar, the world's second-largest supplier which owns part of the world's largest gas field, has seen its export capacity hamstrung by Iranian strikes. Qatar provided over 30% of the market in 2025, according to S&P Global. Access to other materials crucial to the semiconductor manufacturing process, such as bromine and aluminium, have also been impacted. In March, chip buyers in Europe were paying more and tapping backup stores as the war disrupted air freight.
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