Raw material shortages outweigh crude import risks for Korea amid war

Audio report: written by reporters, read by AI

Korea’s semiconductor and pharmaceutical sectors could face serious supply disruptions as Donald Trump’s push to blockade the Strait of Hormuz deepens uncertainty around a key chokepoint, with consequences for the Korean economy that could be even more debilitating than the spike in energy prices.

“Middle East geopolitical risks are expanding to supply disruptions in industrial materials, which could pose a greater threat than surging energy prices,” the Korea International Trade Association (KITA) said in a recent report. “In addition to crude oil and naphtha, supply instability in materials such as helium, bromine and ammonia could directly affect Korea’s critical sectors, including semiconductors, electronics, petrochemicals and automobiles.”

Any supply shortfall at Samsung Electronics or SK hynix could quickly escalate into a high-stakes issue for a broad base of clients — including U.S. Big Tech — as well as investors at home and abroad, given the two firms account for nearly 41 percent of the Kospi’s market capitalization as of Monday.

The production of helium and bromine, key components in chip processing, is heavily concentrated in the Middle East.

Korea relies on Qatar for 64.7 percent of its helium imports and on Israel for 97.5 percent of its bromine, based on last year’s data.

Qatar accounts for more than 30 percent of the global helium supply, and the disruption has already pushed up global spot prices by 50 percent compared to before the war, according to KITA.

However, both corporations and the government said the impact of the chokepoint would be minimal. The government also dismissed concerns over helium supply disruptions, saying there won’t be immediate risks.

“We have already secured U.S. substitutes [for helium capacity] by the end of June, so we have ensured semiconductor plants will not have to shut down through June,” Industry Minister Kim Jung-kwan said on the KBS talk show Sunday Diagnosis on Sunday.

Helium is recovered as a by-product of liquefied natural gas (LNG) processing and is used as a coolant in wafer fabrication. Bromine, while not directly incorporated into chipmaking, is used in bromine-based chemicals essential for etching processes. Both materials are considered difficult to replace in semiconductor production.

Chipmakers can also recycle helium, although industry sources say existing inventories and diversified supply chains remain sufficient for now, meaning such measures are not yet considered necessary.

“Helium itself is not consumed in large volumes during chip manufacturing,” an industry source who requested anonymity said. “We have secured enough supplies that helium recycling may not even be necessary at this stage.”

Still, companies are keeping a close watch on how the war unfolds.

Liquid bromine is produced in China, the United States and Japan, but Japan also relies heavily on Israel for imports, with Israeli shipments accounting for 72.5 percent of its liquid bromine imports.

The Ministry of Trade, Industry and Resources has recently formed a dedicated task force of around 40 officials to monitor inventory and supply-and-demand conditions daily.

The government has also allocated 869.1 billion won ($584.6 million) in a supplementary budget to stabilize supply chains.

Kim visited four companies in the Banwol-Sihwa industrial complex in Ansan, Gyeonggi — ADChemTech, Lotte Packaging Solutions, SP Samhwa and Daeduck Electronics — on Monday to assess petrochemical supply conditions.

At ADChemTech, a manufacturer of medical syringe packaging, he emphasized his commitment to ensuring the stability of health-critical supplies essential to human life.

Then he visited SP Samhwa, a paint manufacturer supplying the shipbuilding, automotive and residential construction sectors and said that import registration procedures had been streamlined since Friday to enable faster raw material imports in the midst of supply disruptions.

"Supply chains for health care and medical goods, essential daily necessities and key national industries are being managed as the top priority, with every effort made to prevent even a single day of disruption," said Kim.

In the pharmaceutical sector, fears of shortages of packaging materials derived from oil- or natural-gas feedstocks have prompted companies to impose purchasing controls.

Yuhan Corporation now requires approval from a sales division head for bulk orders exceeding 500 units of injectable drugs and IV fluids. Hanmi Pharmaceutical has capped shipments of pharmacy packaging materials based on each store’s average monthly usage over the previous three months to prevent stockpiling beyond normal demand. HK inno.N and JW Shinyak have also implemented shipment limits for IV fluid products.

BY LEE JAE-LIM, SARAH CHEA [lee.jaelim@joongang.co.kr]