The following analysis looks at how the disruption in the Strait of Hormuz—sparked by the Iran conflict—has exposed South Korea’s growing energy vulnerability. This vulnerability now directly threatens the world’s technology supply chains, especially Korea’s dominant semiconductor industry.
It also explores why Korea needs to align its energy policy with industrial strategy if it wants to keep leading in chips as AI demand heats up.
Korea’s energy vulnerability exposed by Hormuz disruptions
The Middle East crisis and disruptions in the Strait of Hormuz have delivered a heavy economic blow to South Korea. The shock triggered an 18 percent drop in the stock market, erasing more than $500 billion in market value.
That loss really shows how closely Korea’s fate is tied to energy markets. South Korea still relies heavily on imported fossil fuels.
Oil alone makes up about 36.6 percent of the country’s primary energy mix. Roughly 70 percent of its crude oil comes from the Middle East through Hormuz.
This leaves Korea’s energy system at the mercy of regional geopolitics and global oil prices. The effects ripple out to industry and economic growth.
The energy mix itself reveals some deep-seated problems. Coal still accounts for about 33 percent of Korea’s energy, while nuclear provides around 31 percent.
Despite promises from various governments, renewable energy deployment has fallen behind. That lag leaves Korea exposed to both price swings and supply disruptions as demand rises.
Impact on Korea’s semiconductor sector and global supply chains
Two industry giants—Samsung and SK Hynix—anchor Korea’s economic presence. Together, they make up almost 40 percent of the national stock market and dominate global markets for high-bandwidth memory (HBM) and dynamic random-access memory (DRAM).
Because of this concentration, any energy shock at home quickly shakes global technology supply chains. Energy-hungry chip projects are only getting bigger.
The Yongin complex, for example, is expected to need about 16 gigawatts of electricity. That’s roughly 17 percent of Korea’s national peak demand.
As AI-driven demand climbs, electricity needs will only grow. If domestic energy costs spike, manufacturers might move production to cheaper places like the United States or Southeast Asia.
That could destabilize chip supply and drive up global prices for semiconductors and components. So, disruptions to Korea’s power supply threaten not just its own industries but also tech supply chains everywhere.
Korea’s role as a top chip producer means its energy situation is now a strategic issue for chip markets worldwide. Customers everywhere depend on stable access to memory and processing tech, so this really matters.
Strategic steps to strengthen energy security and sustain chip leadership
If Korea wants to keep its semiconductor edge, it needs to treat power capacity as a top economic priority. Energy policy and industrial goals have to work together, not at odds.
Policymakers might look to TSMC, which is aiming for 100 percent renewable electricity by 2040, as an example. Korea should focus on two urgent steps: boost reliable, homegrown energy sources (like nuclear and renewables), and modernize the grid—removing red tape around transmission and rolling out smarter, more flexible networks.
Korea has promised to phase out coal by 2040. It’s also begun loosening restrictions on solar development and plans to add about 3 gigawatts of transmission capacity for Yongin.
These are good signs, but they need to happen faster and fit more closely with industrial policy. Supporting the huge electricity needs of next-gen chipmaking and AI workloads won’t wait.
Expand reliable, domestically sourced energy
- Increase the share of nuclear and renewables in the energy mix to cut oil dependence and reduce risks from geopolitical shocks.
- Scale up local energy projects that can reliably power data-heavy industries for the long haul.
- Encourage private investment in clean energy with stable rules and long-term contracts.
Accelerate grid modernization and regulatory reform
- Clear out regulatory barriers that slow down transmission expansion. This move could open up new capacity and help cut down on bottlenecks between generation sites and industrial hubs.
- Roll out decentralized smart grids to boost reliability and resilience. These grids can also make demand-side management a lot more flexible, especially when supply gets unpredictable.
- Connect energy planning with industrial planning. That way, new semiconductor campuses and AI facilities can count on secure, cost-competitive power supplies.
Here is the source article for this story: The Iran War Is Also Now a Semiconductor Problem