How the Iran War Threatens the AI Economy: Supply chain disruptions threaten the flow of computer chips, which power AI

models.

https://prospect.org/2026/04/13/how-iran-war-threatens-ai-economy-semiconductors-supply-chain-strait-hormuz/


Credit: PhonlamaiPhoto/iStock

Nearly 50 days into the Iran war, disruptions to the global energy supply chain continue to grow. Though the U.S., Iran, and Israel agreed to a fragile cease-fire on April 7, the Strait of Hormuz remains closed, Iran hopes to continue charging tolls, and the global economy is still a long way from normal.

Fossil fuels, abundant in the Gulf countries, are essential ingredients for countless goods—the helium that powers MRI machines, the fertilizer that boosts crops, and of course the gas that powers cars. Fossil fuels are also critical to the production of semiconductors, the building blocks for all modern technology. A breakdown in production would not only strain supplies of consumer and commercial electronics, but could seriously disrupt the growth of AI computing capacity at a time when firms are funneling hundreds of billions of dollars into data center construction.

The majority of the world’s chips are produced in Asia. Taiwan, home of the Taiwan Semiconductor Manufacturing Company (TSMC), is a powerhouse, the sole producer of certain high-end chips, and the primary supplier of companies like Apple, Nvidia, and Qualcomm. Other semiconductor fabrication plants are located in South Korea and throughout Southeast Asia. Chips made in Asia are then shipped across the world to power AI systems, video game consoles, weapons systems, smart dishwashers, laptops, and many of the other pieces of technology that are ubiquitous in Americans’ personal and professional lives.

Though semiconductors are produced in East and Southeast Asia, many of the raw materials needed for the intensive, precise manufacturing process come from the Middle East. Chips are produced in dustless clean rooms that are some 10,000 times cleaner than outside air, and the process requires dozens upon dozens of chemical components like bromine, helium, and sulfuric acid.

snip