The Middle East conflict disrupts the semiconductor supply chain: Beyond helium, these photolithography materials are also affected

Under the conflict between the U.S. and Iran, the procurement and cost pressures of key materials in the semiconductor industry are raising concerns.

According to TheElec, South Korean chip manufacturers are closely monitoring the situation, worried that supply disruptions may affect the availability of critical raw materials such as helium, diluents, ethanol, and isopropanol (IPA).

Among these, the risks associated with helium supply have become apparent. Industry insiders report that helium spot prices have surged recently, rising over 50%. Semiconductor manufacturers such as Samsung Electronics, SK Hynix, and Dongbu HiTek are prioritizing securing sufficient inventory at current market prices, with their procurement departments checking the supply status and price fluctuations of key materials daily to prevent production interruptions. Nowadays, supply stability has surpassed cost considerations.

Reports suggest that even if peace negotiations are reached, the reconstruction of the Ras Laffan Industrial City may take several years, meaning supply shortages and price fluctuations will pose medium- to long-term risks.

Helium plays a crucial role in the semiconductor industry and is known as a “noble gas.” As a byproduct of liquefied natural gas (LNG) production, it is heavily reliant on Qatar, which accounts for about one-third of global supply. Previously, Iran’s attack on the Ras Laffan Industrial City damaged LNG infrastructure, which could disrupt long-term supply contracts.

As of now, there are no alternatives to helium in the semiconductor manufacturing process. According to MoneyDJ, although TSMC and UMC have achieved helium recovery rates of 60% to 75%, significantly reducing dependence on imports, about 25% of helium loss still needs to be supplemented through imports daily, and the recovery system consumes a lot of power. Moreover, data from the Korea International Trade Association shows that last year, 64.7% of South Korea’s helium imports came from Qatar.

▌Not Just Helium Affected

In addition to helium, rising oil prices have also indirectly increased the production costs of semiconductor materials.

Diluents are cleaning materials used in photolithography processes to remove photoresist residues, with propylene oxide (PO) as the core raw material. PO is processed into PGME and PGMEA, which are then processed into diluents for supply. Reports indicate that suppliers, including DuPont, Dow, and LG Chem, have issued price increase notifications to PGMEA manufacturers, expecting prices to rise by 40% to 50%.

Affected by this trend, suppliers of diluent finished products, including Dongjin Semiconductor, ENF, and Dongyu Fine Chemicals, plan to increase product prices for shipments in April by about 20%.

Additionally, the prices of ethanol and isopropanol (IPA) are also rising. The reports add that South Korean suppliers have begun issuing price increase notifications this week, with expected increases reaching double-digit percentages. Semiconductor-grade ethanol with purity greater than 99.99% can be used for wafer cleaning and removing residues after etching; meanwhile, IPA, with its excellent dissolving capability, can effectively remove contaminants such as metal ions, organic residues, particles, and photoresist residues from wafer surfaces.

Kaiyuan Securities believes that the intensifying global geopolitical risks and concerns over “supply disruption” in technology dependency may lead to a repricing by the market. The investment logic in semiconductor materials has formed a “dual driving force.” In the short term, supply chain security anxiety is accelerating downstream manufacturing plants’ willingness and urgency to adopt domestic solutions, especially for “bottleneck” areas. In the long term, capital layout has fully accelerated, and the industry end will see intensive catalysts, confirming the high certainty of expanding domestic advanced processes and advanced storage, thus opening growth space for upstream shovel stocks.

(Source: Financial Associated Press)