Oil’s sharp rally amid the Iran war has injected fresh volatility into semiconductor stocks and raised new questions about the cost and pace of the AI boom.
Shares of TSMC, Samsung Electronics, and SK Hynix — key AI chip suppliers — have swung sharply since the conflict began, at one point falling between 9% and 22%, as investors assess rising energy and supply risks.
“Higher energy costs for AI data centers could slow AI infrastructure buildouts, while fabs in Taiwan and South Korea would face growing cost pressures from higher LNG prices,” wrote Phelix Lee, an equity analyst at Morningstar, in a Tuesday note, referencing the costs of liquified natural gas.
Energy markets have been at the center of the turbulence.
Oil accounts for roughly 38% of total US energy consumption, according to Lee, and the US hosts most of the world’s AI data centers. While oil is not the primary source of electricity generation, higher crude prices tend to ripple across energy markets.
AI data centers consume far more electricity than traditional server facilities, driven by power-hungry graphics processing units and advanced cooling systems.
If energy prices remain elevated, cloud providers may reconsider the pace of AI server deployments — a potential knock-on effect for chipmakers riding a wave of AI-driven demand.
Oil prices have swung sharply since the US and Israel attacked Iran at the end of February, disrupting traffic through the Strait of Hormuz, the world’s most critical energy shipping chokepoint.
Brent crude futures were trading around $87 per barrel early Wednesday, while US West Texas Intermediate hovered near $83, after both benchmarks breached $100 earlier this week before retreating.
Liquefied natural gas prices have also jumped following the shutdown of Qatar’s largest LNG export facility, tightening global supply.
The US Energy Information Administration said Tuesday it expects Brent to average above $95 a barrel over the next two months as the war disrupts supplies, before easing toward $70 by year-end.
With oil prices more than 40% higher this year, operating costs for chip fabs and data centers are likely to rise. Morningstar estimates energy expenses account for roughly 3% to 6% of projected 2025 revenue for TSMC, Samsung, and SK Hynix.
“Should the war be prolonged, we could see these costs rise materially,” Lee wrote, adding that much of the burden could ultimately be passed on to customers given the tight supply of AI-related chips.
Beyond oil: material and shipping risks
Energy isn’t the only vulnerability.
Lee also flagged risks to critical semiconductor inputs such as helium and bromine.
Qatar supplies nearly one-third of the world’s helium, a byproduct of LNG production that is critical for semiconductor manufacturing.
A prolonged shutdown of LNG production could tighten helium markets, dent chip yields, or, in a worst-case scenario, temporarily halt fab operations.
Bromine poses a smaller immediate risk, as 98% of South Korea’s bromine supply comes from Israel and flows remain relatively stable, Lee wrote.
“Tail risks remain, however, as a severe escalation or extension of the war could destabilize bromine supply, potentially affecting supplies of memory chips as well,” he wrote.
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