South Korean industry faces crisis over critical material shortages
South Korea’s semiconductor and pharmaceutical sectors face critical supply disruptions as uncertainty surrounding the Strait of Hormuz chokepoint deepens, the Korea JoongAng Daily reports. The economic consequences of a blockade could prove more debilitating than surging energy prices, as the country relies heavily on Middle Eastern raw materials that are difficult to substitute.
Middle East geopolitical risks are expanding from energy to industrial materials, posing a greater threat than oil spikes, according to the Korea International Trade Association (KITA). Beyond crude and naphtha, instability in the supply of helium, bromine, and ammonia directly threatens Korea’s core industries. This shift is significant because while oil price hikes affect margins, a total lack of specialised raw materials can force an immediate halt to high-tech manufacturing lines, Korea JoongAng Daily reports.
Samsung Electronics (005930.KS) and SK hynix (000660.KS) are particularly vulnerable, accounting for nearly 41% of the Kospi’s market capitalisation as of April 13. Any production shortfall at these firms would escalate into a crisis for global clients, including US Big Tech. South Korea relies on Qatar for 64.7% of its helium and on Israel for 97.5% of its bromine, according to The Elec. Global helium spot prices have already surged 50% since the conflict began, according to KITA data. According to a report by Anadolu Agency, this volatility is compounded by the fact that helium is recovered as a by-product of liquefied natural gas (LNG) processing, and Qatar accounts for approximately 30% to 38% of global helium supply.
The silent threat
The semiconductor bottleneck represents the most severe risk to the global tech ecosystem. Unlike oil, which can be sourced from strategic reserves, high-tech gases like helium and bromine have a highly concentrated production base. Helium is used as a critical coolant in wafer fabrication and is essential for cooling ASML’s extreme ultraviolet (EUV) lithography machines. The crisis intensified following drone and missile strikes on Qatar’s Ras Laffan Industrial City in early March, which damaged the world's largest helium production complex, Fusion Worldwide reports. While industry sources initially estimated six months of inventory, analysts warn that helium cannot be stored in massive quantities at fabrication sites. Working inventory at most facilities typically lasts only one week, making plants dependent on continuous inbound shipments that are now blocked by the closure of the Strait of Hormuz.
Bromine, while not directly incorporated into chipmaking, is essential for hydrogen bromide (HBr) used in etching processes. While South Korea imports finished HBr from Japan and the US, the upstream reality is fragile because Israel and Jordan control over 70% of global liquid bromine production, according to The Elec. Japan, Korea’s primary HBr supplier, relies on Israel for 72.5% of its raw liquid bromine, creating a domino effect that ties Asian manufacturing directly to the Middle East conflict. While chipmakers possess the technology to recycle helium, such drastic measures remain an optional buffer for now, though the widening conflict has triggered a total rethink of long-term inventory management.
Government response and the June deadline
South Korean Industry Minister Kim Jung-kwan dismissed fears of an imminent production halt during an appearance on the KBS program Sunday Diagnosis on April 12. He revealed that the government has secured US substitutes for helium through the end of June to prevent plant shutdowns, Chosun Biz, reports. The Ministry of Trade, Industry and Energy has formed a dedicated task force of 40 officials to monitor supply conditions and allocated KRW869.1bn ($584.6mn) in a supplementary budget to stabilise supply chains. This funding is intended to subsidise the higher costs of sourcing materials from non-Middle Eastern suppliers, cover the import price gap for naphtha, and bolster domestic storage capacity for critical industrial gases. Kim also noted that the Cheonghae Unit destroyer Dae Joyeong is preparing to escort Korean vessels to ensure safe passage through the Red Sea and toward Saudi Arabia's Yanbu Port.
Pharmaceuticals face squeeze
The crisis has also permeated the healthcare sector due to shortages of low-density polyethylene (LDPE), a petrochemical byproduct used in medical packaging. To prevent hoarding and artificial shortages, the government announced a ban on stockpiling of medical syringes and needles effective April 14, 2026, according to Korea JoongAng Daily. Major pharmaceutical firms have implemented strict purchasing controls to ensure stability. Yuhan Corporation (000100.KS) now requires head-of-sales approval for orders exceeding 500 units of IV fluids or 200 units of acetaminophen injections. Hanmi Pharmaceutical has capped shipments of automatic dispenser wrappers based on a pharmacy's average usage over the previous three months, while HK inno.N (195940.KQ) and JW Shinyak (067290.KQ) have also implemented shipment limits for IV fluid products.
The transition of the crisis from energy prices to raw material chokepoints marks a new phase of economic fallout. While the "June buffer" provides a temporary reprieve, the structural dependence on Qatari helium and Israeli bromine remains a primary concern for the Bank of Korea and global tech markets. As the war continues, the focus remains on whether these materials can be diversified fast enough to avoid a hard landing for the Korean export engine. For now, the industrial giants of Suwon and Hwaseong remain operational, but the rising spot prices of obscure industrial gases are being watched as closely as the price of Brent crude.
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