AI Summary
5 min readThe global technology industry, for all its talk of code and silicon, depends on something far more basic: energy. And a large share of that energy flows through one narrow shipping lane in the Middle East, the Strait of Hormuz. As Sean Kim, head of Morgan Stanley's Asia Technology Team, explains, a disruption there wouldn't just rattle oil markets—it could ripple directly into the economics of semiconductor manufacturing, AI infrastructure, and the broader tech supply chain.
The Energy Intensity of Advanced Chips
Advanced semiconductor fabrication is one of the most energy-intensive industrial processes in the world. Kim offers a striking example: in Taiwan, home to the largest share of leading-edge chip production, just one major manufacturer alone accounts for roughly 9–10% of the country's total electricity consumption. That scale of energy use means the stability of power supply is critical.
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What you'll learn
- 1 (00:00) **Introduction & Thesis** - Sean Kim introduces the episode's central thesis: why a Strait of Hormuz closure could matter to the global technology industry.
- 2 (00:38) **Energy Intensity of Chip Manufacturing** - Explains why semiconductors are uniquely vulnerable to energy supply shocks.
- 3 (01:04) **Taiwan's LNG Vulnerability** - Details the specific energy supply risk for the world's largest chip producer.
- 4 (01:36) **The Foundational Role of Chips** - Connects energy risk to the broader tech economy.
- 5 (01:45) **Second-Order Bottleneck: Sulfur** - Introduces a lesser-known, energy-linked input in the chip supply chain.
- 6 (02:18) **Downstream Impacts** - Extends the risk beyond chips to other tech infrastructure.
- 7 (02:39) **Historical Precedent: Energy Price Spikes & Tech Stocks** - Reviews how semiconductor equities have reacted to past oil price surges.
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Show Notes
Our Head of Asia Technology Research Shawn Kim explains what disruptions to shipping in the Strait of Hormuz could mean for the global semiconductor supply chain and the immediate future of AI infrastructure.
Read more insights from Morgan Stanley.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Shawn Kim, Head of Morgan Stanley’s Asia Technology Team.
Today: why the Strait of Hormuz closure may matter to the global technology industry.
It’s Friday, March 13th, at 8 pm in Taipei.
AI and advanced chips may represent the cutting edge of technology, but they depend on something far more basic: that’s energy. And a large share of that energy flows through one narrow shipping lane in the Middle East – the Strait of Hormuz. When energy supply chains are disrupted, the effects can quickly ripple into semiconductor manufacturing.
Advanced semiconductor fabrication is, in fact, one of the most energy‑intensive industrial processes in the world. Take Taiwan, for example – home of the world’s largest share of leading-edge chip production. Just one major manufacturer alone accounts for roughly 9–10 percent of the country's total electricity consumption. That scale of energy use means the stability of power supply is critical.
Taiwan relies heavily on imported LNG to generate electricity. But storage levels are limited. It maintains roughly one and half weeks worth of LNG inventory, with several additional weeks supplied by vessels currently at sea. If shipping through the Strait of Hormuz were significantly disrupted, that supply chain could come under pressure. The immediate impact might not necessarily be an outright shortage – but rising energy costs could still affect semiconductor production economics. And that's important because advanced chips are foundational to everything from cloud computing to artificial intelligence systems.
Energy isn't the only potential bottleneck. Another lesser-known input in the semiconductor ecosystem is sulfur. More than 90 percent of the world's sulfur supply is produced as a by‑product of oil refining. That sulfur is then used to produce sulfuric acid, a key chemical that supports semiconductor materials, metal processing, and battery components.
Disruptions in oil refining tied to shipping constraints or energy market shocks could also affect sulfur supply. In other words, a disruption in energy markets could trigger second‑order effects across multiple layers of the technological supply chain. And those effects extend beyond chips themselves. The downstream impact touches industries tied to electrification, data centers, and advanced electronics manufacturing.
History also offers some lessons learned about how technology markets react when energy prices spike. During periods of major oil pri
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