Will the Iran war trigger a "black swan" event in the chip industry?

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What worries the global semiconductor industry most is not the nominal figures of oil prices, but the few short weeks of energy reserve margin after the Strait of Hormuz is blocked.

According to news from “Chasing Wind Trading Desk,” on March 18, the Barclays macro research team released an in-depth report showing that the ongoing turmoil in the Strait of Hormuz is transmitting substantive "tail risks" to the North Asian semiconductor supply chain through energy and key raw material routes.

Macro researcher Bum Ki Son stated bluntly in the report, "The Middle East conflict has entered the third week, which happens to match the typical shipping cycle from the Middle East to North Asian ports. Starting this week, energy import interruptions in South Korea and Taiwan will become increasingly apparent."

Currently, the market’s focus is no longer just whether crude oil prices will exceed $100, but rather whether the stable electricity and specialty gases, which semiconductor giants depend on for survival, will be exhausted due to the blockade.

Energy Reserves: The "Mismatch" Between Nominal Days and Actual Buffer

From the outside, South Korea and Taiwan appear to have considerable strategic oil reserves, seemingly sufficient to handle short-term shocks. However, Barclays analyzed the underlying concerns behind these numbers in their research report.

Although the South Korean president previously claimed to have 208 days of oil reserves and Taiwan stated reserves exceeding 100 days, Barclays pointed out that these figures include non-energy demands from refining and petrochemical industries, representing some overstatement.

Analyst Dave Dai pointed out: "Considering the huge consumption of the petrochemical and refining industries, South Korea’s actual crude oil reserves are roughly four months, while Taiwan’s reserves are likely approaching the two-month threshold."

More pressing is liquefied natural gas (LNG). Due to storage technology limitations, the LNG buffer is much narrower than oil. Taiwan’s nominal LNG reserves are only enough for 11 days, while South Korea’s are about 9 days.

Barclays’ calculations suggest that even taking supply diversification into account, both regions’ dependence on Middle Eastern LNG is still as high as 15%-25%. In a situation of complete blockade, LNG reserves can support the power systems for at most one and a half months.

Electricity Flexibility: Nuclear Storage Versus the “No Nuclear” Dilemma

The Barclays report found that when dealing with an LNG shortage, South Korea and Taiwan showed very different resilience in their power systems.

South Korea’s electricity mix is relatively balanced. When faced with a 16% shortfall in Middle Eastern natural gas, the South Korean government plans to raise the utilization rate of nuclear power from the current 60%+ to 85%-87% (returning to 2015’s high levels), supplemented with a small amount of increased coal power, which can basically offset the impact of the energy disruption.

In comparison, Taiwan is facing a structural “fragility.” With the decommissioning of the last nuclear reactor in May 2025, Taiwan’s power system will entirely lose its nuclear energy resilience. Currently, gas-fired generation will account for 48% of total generation (2025 data).

"In our scenario hypothesis, if Middle Eastern LNG supply is cut by 24%, for Taiwan to fill the gap, coal-fired generation would need to rise by 36%."

Dave Dai pointed out in the report, "Although this is technically feasible, with reserve capacity already thin, the risk of the system collapsing during summer peaks is extremely high." Currently, the technology industry in Taiwan accounts for 25% of total power consumption, with TSMC (Taiwan Semiconductor Manufacturing Company) alone taking up 10%.

The “Precision Pain” of Chip Manufacturing: Power Fluctuations Are a Hidden Red Line

For semiconductor manufacturing processes precise down to the nanometer level, power supply stability is not just a cost issue, but a matter of survival.

Barclays pointed out that semiconductor production requires around-the-clock uninterrupted operation in a vacuum environment. Bum Ki Son emphasized: “Even momentary power outages or voltage fluctuations could render an entire batch of wafers unusable.”

If energy blockades lead to electricity rationing, policymakers will face a dilemma:

1. Prioritize residential use: This would force factories to reduce output, causing a sharp drop in semiconductor production.
2. Maintain unstable power supply: This would directly destroy yield rates, greatly reducing the added value per product unit.

This risk is not limited locally but is “contagious“ across regions. For example, Taiwan’s GPU packaging is highly dependent on Korea’s high-bandwidth memory (HBM) chips. If power fluctuations in Taiwan halt packaging lines, it would in turn reduce demand for Korean HBM, creating a domino effect.

Specialty Gases: The Overlooked Raw Material Storm

In addition to power, the Strait of Hormuz is also the sole route for critical chemical raw materials in semiconductors.

Barclays data show that South Korea and Taiwan are shockingly dependent on the Middle East and Israel for specialty gases essential in chip etching and cleaning processes:

• Bromine: 97% of Korea’s demand comes from Israel; for Taiwan, it is 95%;
• Helium: 55% of Korea’s demand is from Gulf nations, 69% for Taiwan;
• Ethylene: Dependency also ranges between 40%-60%.

While major producers keep several months’ worth of raw material reserves, Barclays warns that if the blockade lasts more than three months, the highly concentrated supply chain disruption would send global semiconductor supply into a true “vacuum period.”

Market Consequences: Violent Restructuring of Output and Prices

Researcher Brian Tan warns that the market is currently underestimating the destructive power of this conflict on the valuation of global technology.

He stated: "What Asian policymakers worry about most is not just the inflation driven by oil prices, but the ‘Outsized Growth Shock’ in semiconductor output. If global demand for semiconductors remains robust, this supply-side shock will directly push up the nominal price of chips, even if output is shrinking."

Currently, the Monetary Authority of Singapore (MAS) and Bank Negara Malaysia have shown great vigilance over geopolitical risks. Brian Tan believes that, as economies deeply tied to technology, these central banks will be especially cautious about raising rates or tightening policies, so as to prevent a domestic financial chain meltdown when external energy risks materialize.

For global investors, the Iran war is not just a regional conflict, but a stress test on the underlying logic of global computing power. If the strait blockade does not significantly ease in the coming weeks, the "black swan" of the chip industry may turn from rumor into reality.

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