The Iran war is hitting the AI supply chain where it hurts

Iran’s strike on SABIC’s Jubail petrochemical complex in early April halted production of the resin used to make PCB laminates. Goldman Sachs analysts say prices surged 40% in April alone. A South Korean supplier to Samsung and AMD says epoxy resin wait times have stretched from three weeks to fifteen.

The Iran war that began with US and Israeli coordinated strikes in late February 2026 has now reached the printed circuit board supply chain. This infrastructure underlies almost every electronic device, from smartphones and laptops to the AI servers that hyperscalers are racing to deploy.

Prices of printed circuit boards (PCBs) surged as much as 40% in April alone compared to March, according to Goldman Sachs analysts, and industry sources told Reuters that the disruption is compounding supply pressures that were already building before the conflict began.

The mechanism is specific and traceable to a single facility. In early April, Iranian forces struck Saudi Arabia’s Jubail Industrial City petrochemical complex on the Gulf coast, home to SABIC, the Saudi Basic Industries Corporation.

SABIC accounts for approximately 70% of the world’s supply of high-purity polyphenylene ether (PPE) resin, the critical base material used to manufacture the laminate from which printed circuit boards are made.

The strike forced a halt in SABIC’s PPE production. The tightening of PPE availability worldwide has rippled directly into PCB prices, because the laminate is not readily substitutable, and alternative suppliers do not exist at anything like the scale required to absorb a 70% shortfall.

The secondary input pressure is copper. Copper accounts for approximately 60% of total raw material costs in PCB manufacturing, according to Victory Giant Technology, a major Chinese PCB supplier whose customers include Nvidia.

Victory Giant warned earlier this month that the Middle East conflict could push up prices for key materials, including resin and copper, as Gulf shipping disruption affects both commodity transit and the petrochemical feedstocks used in production.

Shipping in and out of the Gulf has been severely disrupted since the conflict began, compressing the logistics routes that connect Gulf chemical producers to Asian electronics manufacturers.

The operational impact is already showing up in procurement timelines. A senior executive at Daeduck Electronics, a South Korean PCB manufacturer whose customers include Samsung Electronics, SK Hynix, and AMD, told Reuters that the company has begun discussions with customers over price increases.

The executive said their priority has shifted from meeting customers to meeting suppliers, and that wait times for chemical materials such as epoxy resin have stretched from three weeks to fifteen.

A fifteen-week lead time for a critical production input is not a temporary supply shock; it is a structural disruption that will take months to resolve, even if the underlying cause, the SABIC production halt, were reversed today.

PCB prices had already been rising before the Iran war, driven by accelerating demand for AI servers. The conflict has arrived as an additional shock on top of an already tight market.

Cloud service providers, according to the Goldman Sachs note, are willing to accept further price increases because they expect demand to outstrip supply for years.

That willingness to absorb cost increases means PCB price signals are not functioning as a brake on demand; they are simply being passed through to the cost base of AI infrastructure. The Prismark research firm projects the global PCB industry will grow 12.5% to reach $95.8 billion in 2026.

The PCB disruption is one of several supply chain pressures the Iran war has generated for the technology industry. Helium, essential for semiconductor manufacturing as an inert coolant that prevents rogue chemical reactions during chip production and used to detect leaks in fab cleanrooms, has seen spot prices roughly double, according to Fitch Ratings.

Qatar’s Ras Laffan Industrial City, which accounts for approximately one-third of global helium supply, has been offline following Iranian strikes in early March. TSMC and SK Hynix have both indicated their helium inventories and diversified supply chains have so far insulated them from operational disruption, and J.P. Morgan concluded in a March note that the Iran war represents “a manageable risk, for now” given semiconductor industry inventory buffers.

But the qualifier “for now” carries weight: the ceasefire agreed on 7 April is described as fragile, the Strait of Hormuz remains partially closed, and SABIC’s Jubail production remains offline.

The AI industry’s $200 billion-plus annual capital expenditure plans are being stress-tested against a geopolitical disruption that nobody planned for.