The West Asia crisis is driving up costs for India’s semiconductor ecosystem, as crude prices have risen 10–13% amid tensions around the Strait of Hormuz, which carries- 20% of global oil. This has led to 20–30% higher energy costs, increasing both capital and operating expenses across fabs and electronics manufacturing.

Key Highlights

• West Asia crisis drives energy costs up, increasing semiconductor manufacturing expenses in India.
• Supply chain disruptions and helium shortages add pressure on India’s growing chip ecosystem.

Supply chain disruptions are adding further pressure. West Asia is a critical supplier of inputs such as helium, sulphur, and bromine, essential for chip manufacturing. In particular, helium shortages—linked to disruptions in Qatar’s LNG output—are tightening global supply, with prices rising sharply and impacting semiconductor production processes that rely on the gas and have no easy substitutes.

Logistics challenges are compounding the issue. Shipping disruptions and higher freight costs are delaying the movement of critical equipment and materials. This is already visible in downstream sectors, where India’s smartphone shipments are projected to drop to 132 million units in 2026 from 152 million in 2025, reflecting supply shortages and rising component costs.

Also Read: West Asia Crisis Disrupts Key Indian Industries, Supply Chains Hit

The impact is particularly severe for India due to its structural dependence on imports. The country currently meets over 90% of its semiconductor demand through imports, making it highly vulnerable to global disruptions. Industry experts note that OSAT (assembly and testing) players are the most affected, as they face both rising petrochemical input costs and supply chain vulnerabilities.

Overall, the West Asia crisis is turning India’s semiconductor push into a cost-intensive and risk-sensitive ecosystem, with rising input costs, material shortages, and logistical delays threatening timelines and competitiveness at a crucial stage of industry development.