The Impact of the US-Iran War on Technology's Supply Chains
Data Infrastructure / Infrastructure Management | 6 min read
The ongoing US-Iran War has captured global attention for its disruption of oil and gas markets. Yet beneath the surface, a quieter crisis is sending shockwaves through the technology supply chain. A critical shortage of helium — a vital element in the production of advanced semiconductors that power today's hyperscale data centres — is emerging as a major threat to the sector's stability. Combined with the effective closure of the Strait of Hormuz since 4 March 2026, the conflict is reshaping the foundations of global AI, cloud, and digital infrastructure at one of the most consequential moments in the industry's history.
Why Helium Is Central to the Semiconductor Crisis
Semiconductor chips are the bedrock of the data centre industry — powering servers, storage systems, and networking equipment that underpin AI, cloud, and hyperscale workloads. To manufacture advanced chips, ultra-pure helium is functionally irreplaceable. It is used for wafer cooling during the photolithography process and for leak detection in complex sub-5-nanometre chip manufacturing, where even microscopic contamination can scrap entire batches. Helium's unique physical properties — including the lowest freezing point of any element — make it impossible to substitute in these precision-driven, high-yield applications.
With Iran blocking ships from leaving the Persian Gulf through the Strait of Hormuz, alternative maritime routes have been sharply curtailed, effectively pushing a significant portion of global helium supplies offline. If reserves continue to dwindle, the world's semiconductor foundries could face production standstills — triggering a cascade of chip shortages and placing significant strain on data centre operators racing to scale compute capacity in the AI era.
Taiwan, TSMC, and the Energy Dependency Chain
Taiwan, which manufactures roughly 90% of the world's most advanced semiconductors through TSMC alone, runs on imported energy — and a significant portion of that energy flows through the Strait of Hormuz. The Strait carries an estimated 17–18 million barrels of oil per day — roughly one-fifth of the world's supply — along with large volumes of liquefied natural gas. Any prolonged disruption to energy routes, industrial gases, or logistics could raise chip costs, slow AI infrastructure rollout, and ripple across global technology markets.
Wood Mackenzie's base case assumes disruptions last roughly two months — from mid-March to mid-May 2026 — with Qatari production gradually ramping back by end of May. However, analysts note that contract prices linked to oil will continue rising through June regardless of when physical flows normalise. European chip buyers are already paying more to maintain supply chains via air freight, with some companies drawing down inventory reserves built since the Covid-era chip shortage.
Air Freight, Gulf Hubs, and the Distribution Problem
Even where production remains stable, the distribution layer is under pressure. Air cargo hubs in the Gulf region play a major role in semiconductor wafer transportation — and sustained disruption to those hubs could slow chip distribution globally, even if foundry output is unaffected. EV batteries and semiconductors for 2026 production are reported to be stranded in the Gulf. Regional digital infrastructure is also under pressure, with reported latency spikes at Middle Eastern cloud nodes under investigation.
The impact varies significantly by chip value. Higher-value products — including the most advanced chips and data racks — can absorb elevated air freight costs. Companies buying lower-value commodity semiconductors are more likely to dip into inventory stores and wait for cost relief. As Razat Gaurav, CEO at supply chain software platform Kinaxis, noted, companies are actively stress-testing semiconductor flows as disruptions to the Strait of Hormuz and the Dubai airport ripple through global supply chains.
AI Data Centres and the Gulf's Strategic Exposure
The conflict has also exposed a deeper strategic question: the risk of US technology companies becoming dependent on extremely valuable AI data centres in geopolitically unstable regions. Gulf governments — especially the UAE — have invested heavily in AI infrastructure as the foundation of their post-oil economies, positioning themselves as indispensable nodes in the global AI supply chain. These facilities, which cost tens of billions of dollars and host the frontier AI models considered the most valuable software on the planet, now face the dual threat of physical conflict risk and supply chain disruption upstream.
The broader message from analysts and geopolitical observers is consistent: AI growth is increasingly constrained by physical supply chain limits, not just innovation cycles. The Iran War is functioning as an accelerator in a longer-running process — spotlighting where vulnerabilities exist in the globally synchronised semiconductor and AI infrastructure supply chain, and reinforcing the case for nearshoring, supply chain diversification, and strategic inventory buffers.
Key Takeaways
- • The Strait of Hormuz closure since 4 March 2026 is disrupting helium supply — a functionally irreplaceable gas in sub-5nm semiconductor manufacturing — threatening production standstills at global foundries.
- • Taiwan's TSMC — which manufactures ~90% of the world's most advanced chips — depends on energy routed through the Strait, making it directly exposed to the conflict's downstream effects.
- • European chip buyers are absorbing higher air freight costs, drawing down post-Covid inventory buffers, and actively stress-testing semiconductor supply flows amid Gulf route disruptions.
- • AI data centres in the Gulf — built as the foundation of post-oil economies — now face both physical conflict risk and upstream supply chain disruption, exposing a critical strategic dependency.
- • Analysts broadly agree: AI growth is constrained by physical supply chain limits, not just innovation cycles — the conflict is accelerating the case for nearshoring, diversification, and strategic inventory investment.