The semiconductor supply chain faces intensifying 2026 risks from Strait of Hormuz disruptions, a 557% tungsten price surge, and unabated AI chip demand in China. South Korea—home to Samsung and SK Hynix, which control ~80% of HBM and ~70% of DRAM—imports 70% of its crude via Hormuz. Tungsten, essential for advanced nodes and controlled 79% by China, saw exports fall 40% in 2025. BMO forecasts a 2026 supply deficit. DOJ indictments confirm AI chip demand persists via covert channels.
According to sourceability.com, multiple converging geopolitical pressures—including energy chokepoints in the Strait of Hormuz, a 557% surge in tungsten prices since February 2024, and persistent AI chip demand in China despite U.S. export controls—are escalating cost and risk across the global semiconductor supply chain.
Energy chokepoints and tungsten surge raise supply risks
Military conflict in Iran—though geographically distant from major chip fabrication facilities—is exerting tangible pressure on semiconductor production. Disruptions to oil shipments through the Strait of Hormuz have directly impacted South Korea, which imports roughly 70% of its crude oil from the Middle East, nearly all transiting Hormuz. Samsung and SK Hynix—headquartered in South Korea and collectively controlling approximately 80% of global HBM production and about 70% of the DRAM market—saw their stock valuations drop more than 20% at the conflict’s onset before partially recovering.
As researchers at the Carnegie Endowment observed, the conflict has exposed a long-standing vulnerability in the South Korean chip sector and wider economy created by the country’s dependence on imported fossil fuels.
Meanwhile, tungsten—a critical material with an exceptionally high melting point and density, used both in chips and advanced-node manufacturing equipment—has become a strategic bottleneck. In February 2024, China added tungsten to its export control list. Per Bloomberg data cited by Fastmarkets, tungsten prices now stand at $2,250 per metric ton unit, up 557% in just over a year—outpacing gains in gold, copper, and oil. Chinese exports of restricted tungsten products fell by roughly 40% in 2025. China controls approximately 79% of global tungsten mine production.
With no practical substitute at scale and western efforts to build alternative supply chains still years away from meaningful capacity, BMO analysts forecast another tungsten supply deficit in 2026.
Nvidia’s China orders highlight persistent AI demand
Despite these bottlenecks, demand for AI chips remains at an all-time high. As revealed by a recent U.S. Department of Justice indictment, demand for AI chips in China has not abated—even under years of U.S. export restrictions—but has instead migrated through shadowy new pathways.
Source: sourceability.com
Compiled from international media by the SCI.AI editorial team.
