How could the war in Iran disrupt the global digital economy?

The semiconductor sector is facing growing pressure, threatening the global economy as a whole. The industry that produces the computer chips powering the digital world requires vast resources to operate efficiently, including critical minerals and large amounts of energy. With the war being waged by the United States and Israel in Iran, these supply chains are facing significant disruptions.

Although former US President Donald Trump said on Monday that the war would end “very soon,” concerns remain that the conflict and its repercussions could be long-lasting. Such a scenario could prove catastrophic for a wide range of global supply chains, in addition to the mounting human and environmental costs already emerging.

Computer chips are now an indispensable component of the global digital economy. As Duke University’s Deep Tech blog noted, semiconductors have “reshaped the digital era and are embedded in everything from satellites and smartphones to medical devices and electric vehicles.” Any disruption to their availability or increase in their cost could therefore have major consequences for producers and consumers worldwide.

Ray Wang, a memory analyst at SemiAnalysis, told CNBC: “A prolonged regional conflict could disrupt chip manufacturing by affecting access to materials such as helium and bromine. For now the impact appears limited, but if the conflict continues companies may need to reorganize their sourcing of these critical materials.”

The Middle East’s importance despite the focus on Taiwan

While more than 90% of advanced chips are produced in Taiwan, the Middle East remains central to supply chains. Qatar, for example, produces more than one-third of the world’s helium, a key element used in semiconductor cooling systems and circuit printing. Any major disruption to global helium supply—whether due to production or transportation issues—cannot easily be replaced with alternative materials.

The semiconductor industry was already facing major challenges due to the concentration of production in Taiwan, which itself faces energy security concerns and relies heavily on external imports, in addition to ongoing tensions with China. With global oil supplies now disrupted by the war in Iran, these risks could intensify and affect Taiwan’s vital energy supply, with broader consequences for the global economy.

Direct impact on South Korean chipmakers and the expansion of artificial intelligence

Semiconductor manufacturers in South Korea are facing an even greater shock than their counterparts in Taiwan, as they are the main producers of memory chips, which have seen rapidly rising demand due to the expansion of artificial intelligence.

If the prices of these chips rise significantly, AI activity could slow as costs become too high.

Jingjie Yu, an equity analyst at Morningstar, said: “This could significantly increase the total cost of ownership for hyperscalers, threatening the adoption of AI infrastructure. A prolonged war could lead to a decline in demand for memory chips used in AI.”

A new threat to digital infrastructure

The conflict has taken a dangerous turn for the technology sector after Iran’s Revolutionary Guard–affiliated Tasnim news agency published a list of “new targets” this week. The list reportedly included regional offices, cloud infrastructure, and data centers linked to companies such as Google, Amazon, Microsoft, Nvidia, IBM, Oracle, and Palantir.

The threats have not remained merely theoretical. Iranian drones reportedly targeted three AWS data centers in the United Arab Emirates and Bahrain, marking the first military attacks on US cloud service providers and causing fires, power outages, and disruptions to payment and banking services. AWS advised clients to shift computing workloads entirely outside the Middle East.

Direct economic consequences

Nvidia temporarily closed its offices in Dubai following the attacks, Amazon shut its regional offices, and Google employees in Dubai were stranded after flight cancellations.

Meanwhile, Samsung and SK Hynix have reportedly lost more than $200 billion in market value since the start of the war. South Korea’s Ministry of Industry also warned that the semiconductor supply chain depends on at least 14 inputs from the Middle East, in addition to helium.

Patrick Murphy, executive director of the geopolitics unit at Hilco Global, said: “Iran used to target oil fields, but its recent attacks on data centers in the UAE show that it now considers digital infrastructure a strategic target.”