TSMC could lose power due to the US-Iran conflict, putting the chip market at risk

A new escalation of the US-Iran conflict has created risks not only for the oil market but for the entire global semiconductor industry. If Taiwan faces fuel supply disruptions, TSMC factories — the world's largest chip manufacturer — will be hit hard.

Why the risk increased

The threat looks particularly serious because of Taiwan's dependence on energy imports from the Middle East. According to available information, more than a third of the island's power plants run on fuel coming from this region. If a military conflict disrupts logistics, the energy system will quickly feel the shortage. For semiconductor production, this is critical: factories cannot simply "pause" complex technical processes without losses to equipment, wafer batches, and delivery schedules.

The problem is that this is not a local player but a company through which a huge share of the world's advanced microchip production flows. TSMC manufactures chips for smartphones, servers, artificial intelligence systems, network equipment, and vehicles. Any disruption at such facilities quickly becomes a global problem: delays first emerge at the contract manufacturer, then spread to consumer electronics brands, cloud providers, and industrial customers.

Where the weak point is

The main vulnerable point in this scenario is not the factories themselves but energy supply. Even if production lines and personnel are ready to operate normally, the semiconductor industry depends on stable electricity supply without sharp drops and emergency shutdowns. For modern factories, this is a basic requirement because process precision is measured not in hours but in seconds and micrometers. Any unplanned downtime damages not just current output but also product quality, line utilization, and contractual obligations to customers.

If disruptions begin in the coming days, the consequences could develop as follows:

• reduction or postponement of some production cycles at Taiwanese factories;
• delays in chip shipments for smartphone, laptop, and data center manufacturers;
• new increase in waiting times for automotive electronics and industrial automation;
• pressure on component prices and increased nervousness throughout the supply chain.

This scenario will be most painful for segments where spare capacity is already limited and dependence on one or two contract manufacturers is high. At such moments, the market recalls the lessons of the pandemic: shortage does not begin when warehouses are empty but when participants in the chain stop being confident in stability over the coming weeks. Sometimes news alone about the risk of disruptions is enough for companies to start reviewing purchases and accelerating backup orders.

What threatens the market

Even a brief disruption in Taiwan could extend far beyond the island. TSMC is embedded so deeply in the global production system that its problems almost automatically become problems for customers in the US, Europe, and Asia. For the AI market, this is also a sensitive factor: demand for accelerators, server processors, and related components remains high, and any instability from the world's largest manufacturer adds pressure.

At the same time, there is virtually no way to quickly replace Taiwanese volumes. Competitors have their own contracts, limited capacity, and long production cycles. This means that even a temporary dip could result not in an immediate collapse but in a gradual accumulation of delays. First, this is visible in shipping deadlines, then — in prices, product release plans, and investment decisions by companies that depend on advanced chip supplies.

For many customers, this is also a signal to urgently review reserves, suppliers, and schedules for launching new devices.

What this means

The situation around Taiwan demonstrates how fragile the global semiconductor supply chain remains. Even the risk of electricity disruptions at a single key manufacturer like TSMC can turn geopolitics and energy into direct factors in chip shortages for the entire market. The higher the concentration of production at a few points, the more any regional crisis reverberates across all global electronics.