A surge in oil prices amid the Iran war has created new volatility in semiconductor stocks and raised new questions about the cost and pace of the AI boom.
Shares of major AI chip suppliers TSMC, Samsung Electronics and SK Hynix have soared since the conflict began, at one point falling between 9% and 22% as investors assess rising energy and supply risks.
“Rising energy costs for AI data centers could slow the buildout of AI infrastructure, while factories in Taiwan and South Korea will face increased cost pressure from rising LNG prices,” Morningstar equity analyst Felix Lee wrote in a note Tuesday, citing the cost of liquefied natural gas.
Energy markets are at the center of the turmoil.
According to Lee, oil accounts for about 38% of total energy consumption in the United States, and the United States is home to most of the world’s AI data centers. Although oil is not the main source of power generation, rising oil prices tend to have ripple effects throughout the energy market.
AI data centers are powered by power-hungry graphics processing units and advanced cooling systems, which consume much more power than traditional server facilities.
If energy prices continue to soar, cloud providers could reconsider the pace of AI server deployments, with potential knock-on effects for chipmakers riding the wave of AI-driven demand.
Oil prices have soared since the United States and Israel attacked Iran in late February, disrupting traffic in the Strait of Hormuz, the world’s most important energy shipping chokepoint.
Brent crude oil futures were trading around $87 a barrel early Wednesday, while U.S. West Texas Intermediate hovered around $83 before falling after both indexes topped $100 earlier this week.
With the closure of Qatar’s largest LNG export facility, the price of liquefied natural gas has also soared, tightening global supplies.
The U.S. Energy Information Administration said on Tuesday that war-related supply disruptions will cause Brent crude oil prices to average more than $95 a barrel over the next two months, before falling toward $70 a barrel by the end of the year.
Oil prices have risen more than 40% this year, potentially increasing operating costs for chip factories and data centers. Morningstar estimates that energy costs will account for about 3% to 6% of TSMC, Samsung, and SK Hynix’s expected 2025 revenues.
“If the war drags on, these costs could rise significantly,” Lee wrote, adding that given the tight supply of AI-related chips, much of the burden could ultimately be passed on to customers.
Beyond oil: materials and transportation risks
Energy is not the only vulnerability.
Lee also pointed to risks to key semiconductor input materials such as helium and bromine.
Qatar supplies almost a third of the world’s helium, a byproduct of LNG production that is essential for semiconductor manufacturing.
A prolonged halt in LNG production could tighten the helium market, reduce chip yields or, in a worst-case scenario, temporarily halt plant operations.
Bromine does not pose an immediate risk because 98% of South Korea’s bromine supply comes from Israel and the flow of bromine is relatively stable, Lee wrote.
“Tail risks remain, however, as a serious escalation or extension of the war could destabilize bromine supplies and also impact memory chip supplies,” he wrote.
