Over the past year, shortages of key electronic components such as memory chips and printed circuit boards (PCBs) have become increasingly acute across many industries. In anticipation of A.I. demand exceeding available capacity, large cloud service providers and A.I. infrastructure developers have been securing inventories well in advance and, in many cases, paying higher prices than competing manufacturers from other industries for available supplies.
Other industries that usually purchase these supplies have since experienced extended lead times and volatile price increases for intermediate components, including for less advanced chips and substrates that are used in consumer, automotive, and industrial electronics.
The outbreak of war in the Middle East has led to further supply disruptions over the past several months. Many major electronics manufacturers in Japan, South Korea, and Taiwan previously relied on the Strait of Hormuz for supplies of key raw materials. Shipping delays have compounded supply bottlenecks and could severely disrupt production if the waterway remains closed for several more months. Separately, new trade restrictions and increased volatility in the global trade environment threaten short-term prices and long-term supplies of several key raw materials used in electronics manufacturing.
A.I. industry demand causes bottlenecks across electronics manufacturing
Despite significant investment in expanding electronics manufacturing capacity over the past several years, demand generated by AI data centers for memory chips, printed circuit boards, substrates, and other materials has continued to outpace new production capacity.
Semiconductor shortages
Even with ongoing investments into semiconductor production, new semiconductor fabrication capacity is not expected to come online for at least two years, suggesting that supply constraints are likely to continue in the near-term. Some industry analysts currently expect the global memory chip shortage to persist through at least the end of 2026 and into 2027.
Large cloud service providers and A.I. infrastructure developers have tightened the electronics market by outbidding other manufacturers for available inventory. As a result, semiconductor manufacturers are increasingly shifting production capacity away from conventional dynamic random-access memory (DRAM) products toward higher-value high-bandwidth memory (HBM) used in A.I. accelerators.
This transition is creating shortages of conventional DRAM used in a wide range of products, including consumer electronics and automotive systems. Manufacturers are also gradually phasing out older memory technologies such as DDR4 and LPDDR4, which remain more widely used in automotive and industrial applications.
Printed circuit boards demand
The rapid expansion of A.I. infrastructure has also sharply increased demand for PCBs and their components. A.I. systems require high-layer-count PCBs, which consume greater volumes of specialized base materials than conventional circuit boards.
This has led to widespread shortages of several materials used in high-performance PCBs as well as in other, less advanced types of PCBs, including low-loss laminates, specialty glass fabrics, and heavy copper-clad laminates.
As a result, PCB base material supplies are increasingly diverted away from other industries, and companies are required to make orders well in advance compared to previous order times. Lead times have now reportedly reached four to six weeks for standard flame retardant 4 (FR-4) substrates and 20 weeks for both advanced laminates and copper-clad laminates.
Among these materials, glass cloth has emerged as a particularly significant constraint. The Japanese manufacturer Nitto Boseki Co., Ltd. supplies around 90% of the world’s low-coefficient-of-thermal-expansion (CTE) glass cloth, commonly known as T-glass, for PCB use, but has been experiencing production bottlenecks due to exceptional demand.
While other companies are working to provide additional supplies, electronic components manufacturers have raised concerns regarding the quality of alternative supplies and their compatibility with design and regulatory requirements. Additional demand for T-glass has arisen due to its use in Ajinomoto Co., Inc. Build-up Film (ABF) substrates, which are widely used in A.I. processors and other high-performance semiconductor packages. As more T-glass is allocated to ABF substrate production, less material is available for other applications, including bismaleimide-triazine (BT) substrates used in automotive and consumer electronics.
Middle East conflict worsens material shortages for East Asian electronics manufacturers
The outbreak of conflict in the Middle East has further disrupted the production and transport of key raw materials needed for electronics manufacturing, particularly affecting production sites in East Asia. The closure of the Strait of Hormuz has threatened the availability of key chemicals and significantly increased transport costs. Since the strait’s closure, global air freight costs for electronics manufacturers have risen by 40-50%.
Helium
The conflict has severely threatened helium supplies from the region. On March 2, an Iranian missile attack damaged QatarEnergy’s Ras Laffan industrial site, which previously supplied around one-third of the world’s helium. Production remains halted at the facility amid ongoing safety risks.
Helium gas is used during semiconductor manufacturing to flush out other gases inside wafer fabrication systems. These constraints on helium supply have reportedly led to rationing at semiconductor fabs in South Korea and Taiwan.
Nippon Sanso Corporation (NSC), a major manufacturer of industrial gases, announced in June that it will raise prices across all of its helium-related products in Japan by more than 30% on average from July due to supply disruptions caused by the conflict. The company is also considering changes to allocation volumes and extending product lead times, depending on how supply conditions develop in the coming months. Prior to the conflict, Japan relied on Qatar for around 40% of its helium imports.
Separately, many International Organization for Standardization (ISO) helium containers have been stranded due to the strait’s closure. These containers are crucial for storing and transporting helium gas at extremely low temperatures. Even if helium supply increases from alternative sources, disrupted ISO helium container availability could delay the normalization of helium production.
Bromine
Bromine supply from the Middle East has also emerged as a potential vulnerability. Bromine is used to produce semiconductor-grade hydrogen bromide, a gas used in etching and cleaning processes during semiconductor manufacturing.
Israel and Jordan produce around two-thirds of the global supply, and the Israel-based ICL Group alone accounts for approximately 40% of global bromine production. The company supplies roughly 97% of South Korea’s bromine imports alone. Although most bromine exports from the region are shipped through the Mediterranean and have therefore not been directly disrupted by the closure of the Strait of Hormuz, a prolonged regional conflict could threaten key production facilities or logistics lanes.
Resins
Disruption to shipping through the Strait of Hormuz have also worsened shortages of key chemicals used in PCB manufacturing. Materials most affected include epoxy resins and resin feedstocks such as methanol, xylene, and solvents. These resins are crucial to manufacturing copper clad laminates (CCLs), which provide bases for PCBs and chip substrates.
Resin supply impacts have been further compounded by an Iranian attack on the Saudi Basic Industries Corporation (SABIC) Jubail facility in Saudi Arabia, which disrupted exports of polyphenylene ether (PPE) resin used as an electrical insulator in PCBs. One estimate indicates that the facility previously supplied approximately 70% of the world’s high-purity PPE resin, and a full resumption of production is not expected to be completed before the end of 2026.
Trade restrictions continue to threaten key raw material supplies
Additionally, volatility in the global trade environment continues to impact electronic components manufacturers worldwide. Although U.S. President Donald Trump has threatened tariffs on finished semiconductors, his administration has so far declined to move forward with these product-specific tariffs and has officially delayed consideration of tariffs on finished Chinese semiconductors until at least June 2027.
Copper
However, potential U.S. tariffs on copper have threatened an already-fragile global market, while Chinese export controls on tungsten have hurt production at Japanese electronics suppliers. Copper prices have reached record highs this year amid strong demand, ongoing supply disruptions, and expectations of additional U.S. trade restrictions. Copper wiring components are widely used in semiconductors, while copper foil is crucial to PCB production.
Although current U.S. tariffs of 50% apply only to certain semi-finished copper products, the Trump administration has not yet announced the results of its investigation into refined copper imports, which had previously been expected by June 30.
If implemented, proposed tariffs on refined copper would begin at 15% in January 2027 and be phased in over time. Ahead of these potential tariffs, traders have accelerated shipments to the U.S., limiting supply for manufacturers located in other countries.
Disruptions in the Strait of Hormuz have compounded these difficulties, with increased energy costs driving up prices for refined copper.
Additionally, producers in Chile, Indonesia, the Democratic Republic of the Congo, and Australia have warned that sulfuric acid shortages resulting from the closure of the Strait of Hormuz could force production curtailments. These four countries combined produce around 44% of the world’s copper.
Sulfuric acid is an essential input for refining copper ore, and prior to the war, nearly half of globally traded seaborne sulfur originated in the Middle East as a byproduct of petrochemical production.
Tungsten
Lastly, Chinese export controls on tungsten continue to disrupt global semiconductor supply chains.
Since the beginning of 2026, Beijing has added over 40 Japanese companies to its dual-use export control list, restricting tungsten exports to manufacturers in a broad range of industries. China produces approximately 80% of the world’s tungsten.
These restrictions have forced major Japanese chemical producers Kanto Denka Kogyo Co., Ltd. and Central Glass Co., Ltd. to halt production of tungsten hexafluoride because of shortages of processed tungsten from China.
These companies are major suppliers of Samsung Electronics Co., Ltd. and SK Hynix Inc., which together dominate the global memory chip market, producing a combined 78% of the world’s HBM chips. Tungsten hexafluoride is a critical process gas used to deposit tungsten metal films onto silicon wafers during semiconductor manufacturing.
Beyond semiconductor fabrication, tungsten carbide drill bits are widely used in PCB manufacturing, creating additional exposure for the electronics industry. Although several new tungsten mining projects are under development outside China, most are not expected to begin production for several years, leaving manufacturers vulnerable to Chinese export policy in the medium-term.
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