How Middle East Conflict is Disrupting Global Procurement
The escalating military action between the US and Israel against Iran has brought shipping traffic in the Strait of Hormuz to a near standstill.
The resulting disruption has sent shockwaves through global procurement networks, affecting supplies of helium required for semiconductor manufacturing, aluminium essential for automotive production and a wide range of raw materials that have seen significant cost increases.
Printed circuit boards are experiencing substantial cost rises as supplies of critical minerals and resins face severe disruption. These components are fundamental to manufacturing almost all electronic devices, from smartphones to computers, making the supply chain crisis particularly acute for procurement professionals across the technology sector.
PPE resin production halted
On 7 April 2026, Iran's Revolutionary Guards say a strike was conducted on Saudi Arabia's Jubail petrochemical complex. This attack halted production of polyphenylene ether resin, which accounts for a significant portion of global output. The material serves as an excellent insulator that maintains its dimensions under heat stress, making it particularly valuable for electronics manufacturers producing high-voltage components and printed circuit boards.
One source who speaks to Reuters says that SABIC has been unable to resume output, severely tightening the availability of the material worldwide.
In April 2026, printed circuit board prices surged as much as 40% from March, Goldman Sachs analysts say in a recent note. The sharp price increase has forced procurement teams to reassess their sourcing strategies and secure alternative suppliers where possible.
Rising demand compounds challenges
Demand for printed circuit boards is largely driven by artificial intelligence (AI) server infrastructure. Manufacturers have been scrambling to secure raw material supplies and soften the impact of skyrocketing costs. The automotive industry also relies heavily on these components for autonomous vehicles and driver assistance systems, adding additional pressure on already strained supply chains.
Resin, copper and other materials all face rising prices due to limited supply. Electronics manufacturers are already facing soaring memory costs, with Gartner projecting that these costs will drive worldwide PC shipments to decline 10.4% and smartphones to decline 8.4% in 2026.
Broader supply disruptions emerge
The conflict has created large-scale supply chain disruptions across industries including semiconductor manufacturing and automotive. The Financial Times reported that a shortage of Qatari gas has knocked out about 10% to 15% of global helium supply, which is essential for manufacturing semiconductors needed for AI data centres.
Semiconductor manufacturers Samsung Electronics and SK Hynix, which supply roughly two-thirds of the world's memory chips, have four to six months worth of helium inventory, a source tells Reuters in early April 2026. This limited buffer could mean significant production constraints if the conflict continues and shipping routes remain disrupted.
According to The Federal Reserve's Beige Book some US manufacturers reported uncertainty surrounding tariffs and the conflict in the Middle East as their firm's greatest challenge. Procurement professionals across industries continue to monitor the situation closely as they work to mitigate risks and maintain continuity of supply.
