<div id="readability-page-1"><span></span><div><p>The AI rally continued this earnings season. But companies building the underlying hardware powering the boom warned that the Iran war is putting pressure on their supply chains and profitability.</p><p>A spiraling conflict in the Middle East has seen oil prices skyrocket and supply chains crucial to the tech sector hamstrung. Shortages of key chipmaking materials, including helium, are expected as the U.S. and Iran remain locked in a standoff.</p><p><span id="RegularArticle-QuoteInBody-4">TSMC<span><span id="-WatchlistDropdown"></span></span></span>, which manufactures <span id="RegularArticle-QuoteInBody-5">Nvidia<span><span id="-WatchlistDropdown"></span></span></span> chips, said the situation in the Middle East could impact its profitability, with prices for certain chemicals and gases likely to increase. <span id="RegularArticle-QuoteInBody-6">Foxconn<span><span id="-WatchlistDropdown"></span></span></span>, the world's largest contract electronics manufacturer, singled out events in the Middle East as a key challenge this year. Chipmaker <span id="RegularArticle-QuoteInBody-7">Infineon<span><span id="-WatchlistDropdown"></span></span></span> said costs would rise for precious metals, energy and freight as a result of the war. </p><p>The companies' situation could get worse, Francisco Jeronimo, analyst at IDC, told CNBC. </p><p>&#34;We can expect further negative impact this year...the price of gas, energy and freight are at an all-time high and are likely to remain high for a few more quarters, even if the situation de-escalates,&#34; he said. &#34;Even with a potential ceasefire, the supply-side damage doesn't improve overnight.&#34;</p></div><h2>Rising costs</h2><div><p>Supply chain disruption and energy costs are two areas of concern for chip companies amid the Iran war. </p><p>Helium, which is mainly produced as a by-product of natural gas production, is crucial to semiconductor manufacturing. Qatar, the world's second-largest supplier which owns part of the world's largest gas field, has seen its export capacity hamstrung by Iranian strikes. Qatar provided over 30% of the market in 2025, according to S&amp;P Global.</p><p>Access to other materials crucial to the semiconductor manufacturing process, such as bromine and aluminium, have also been impacted. In March, chip buyers in Europe were paying more and tapping backup stores as the war disrupted air freight.</p></div><div><p>Chip companies &#34;all understand they need to diversify to be less dependent on a specific region,&#34; said Jeronimo. From a short-term perspective, TSMC is building inventory buffers and diversifying sourcing, he added.</p><p>The Taiwanese chipmaker's strategy was &#34;to continuously develop multi-source supply solutions to build a well-diversified global supplier base and to improve the local supply chain,&#34; Chief Financial Officer Wendell Huang said on an earnings call in April.</p><p><span id="RegularArticle-QuoteInBody-9">VAT Group<span><span id="-WatchlistDropdown"></span></span></span>, which supplies components to chipmakers, said it experienced supply chain disruption and had to reroute shipments of goods to customers as a result of the war. While the company said it expected no material impact on its 2026 full-year outlook, sales for its first quarter took a hit of 20-25 million Swiss francs ($25.5 million to $32 million), the company reported.</p></div><h2>Prolonged conflict concerns</h2><div><p>Rising energy costs are currently a &#34;most acute&#34; problem for manufacturers and fabs, Sebastien Naji, analyst at William Blair, told CNBC.</p><p>But the longer the conflict in the Middle East lasts, the &#34;more significant the second and third order impacts on component costs, vendor margins and overall AI data center economics,&#34; he added. </p><p>Supply chain impacts and rising costs that have been exposed this company earnings season could just mark the beginning of the headwinds should a U.S.-Iran stalemate continue to play out. </p><p>&#34;If the blockade continues through the summer, we are more likely to revisit the risks and impacts in future earnings periods,&#34; Naji said.</p><p>As of Monday, there were no signs that the U.S. and Iran were any closer to reaching a deal as U.S. President Donald Trump ramped up threats to Tehran on Sunday.</p></div><div id="RegularArticle-RelatedLinks-1"><p></p><h2>Read more</h2><p></p><div><div><div><p>Reputational damage, supply chain issues and local investment. What's next for Middle East tech?</p></div></div><div><div><p>How the Iran war could impact hyperscalers' massive AI buildout in the Middle East</p></div></div><div><div><p>Major data center company pauses investment decisions in Middle East amid Iran war, CEO tells CNBC</p></div></div><div><div><p>U.S. tech companies ramp up government lobbying amid Iran war uncertainty</p></div></div><div><div><p>How Russia could profit from Iran war helium supply chain disruption in the chip sector</p></div></div></div></div><div><p>Japanese semiconductor testing equipment maker <span id="RegularArticle-QuoteInBody-17">Advantest<span><span id="-WatchlistDropdown"></span></span></span> said in its earnings that the &#34;business environment surrounding the company remains unpredictable&#34; due to &#34;concerns of escalating tensions in the Middle East potentially leading to a slowdown in the global economy.&#34;</p><p>While the direct impact on earnings was currently limited, the company said, certain costs, including in logistics, had already arisen, and supply chain shortages could emerge.</p><p>But so far, the AI boom is cushioning any investor caution, with stocks continuing to rally. </p><p>&#34;Any disruption so far has been completely overshadowed by the upswing in investor confidence in AI,&#34; Michael Field, chief equity strategist at Morningstar, told CNBC, pointing to big gains in recent weeks from chip companies. </p><p>Nasdaq's <span id="RegularArticle-QuoteInBody-18">PHLX Semiconductor Sector Index<span><span id="-WatchlistDropdown"></span></span></span> — comprising the 30 largest U.S.-traded chip companies — has risen 41% over the past three months. </p></div><div><div>Stock chart icon<p><img src="https://imageproxy.pbkrs.com/https://static-redesign.cnbcfm.com/dist/a54b41835a8b60db28c2.svg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://static-redesign.cnbcfm.com/dist/a54b41835a8b60db28c2.svg"/></p></div><p>Philadelphia SE Semiconductor Index shares over the past three months.</p></div><div><p>&#34;The companies that will be insulated [against impacts from the Iran war] are the ones with safety stock, diversified sourcing and pricing power on manufacturing capacity,&#34; said Jeronimo. </p><p>&#34;Everyone else will be under increasing cost pressure for the rest of 2026.&#34; </p></div><div><p>Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.</p></div></div>

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<p>The ongoing AI boom has led to a rally in tech stocks, but the Iran war is straining supply chains for chipmakers. Companies like TSMC and Infineon warn of rising costs and material shortages, particularly helium, due to geopolitical tensions. Analysts predict prolonged conflict could exacerbate supply chain issues and impact profitability. Despite these challenges, investor confidence in AI continues to drive stock performance.</p>

- The ongoing Iran war is significantly impacting supply chains and profitability for companies in the semiconductor industry.  
- Key chipmaking materials like helium and precious metals are facing shortages and rising costs due to geopolitical tensions, with major players like TSMC and Foxconn acknowledging these challenges.  
- Analysts warn that the prolonged conflict could worsen financial pressures, although current investor confidence in AI is providing some cushioning for stock performance in the sector.

CNBC

Taiwan Semiconductor

Infineon Technologies AG

Infineon Technologies

Global X Cloud Computing ETF

Global X Funds Global X Artificial Intelligence & Tech ETF

Invesco Semiconductors ETF

iShares Semiconductor ETF

VanEck Semiconductor ETF

SPDR S&P Semicon

Advantest Corp.

Tech investors loved this earnings season — but the Iran war is piling pressure on the companies powering the AI boom