Strait of Hormuz Disruption Sparks Photoresist Shortage, Threatening Global Chip Production

The effective closure of the Strait of Hormuz since early March 2026 has triggered a critical shortage of raw materials for the global semiconductor industry, with Japanese suppliers warning major chipmakers of impending disruptions to the supply of photoresists, a substance essential for fabricating microchips. This is a textbook example of a supply chain shock that many U.S. businesses, even those far removed from semiconductor manufacturing, are unprepared for. While the headlines focus on tech giants, the downstream effects on everything from automotive parts to consumer electronics will inevitably impact smaller companies through price hikes and product delays. The assumption that key inputs will always be available is a dangerous one in today's volatile geopolitical landscape. The disruption, which began around March 4th amid escalating conflict in the Middle East, has severely curtailed the shipment of naphtha, a petrochemical feedstock derived from crude oil refining. According to a report from Trendforce, this has created a direct bottleneck for the production of key solvents, specifically propylene glycol methyl ether (PGME) and propylene glycol methyl ether acetate (PGMEA), which are critical components in photoresists and other chipmaking chemicals. Japan, which dominates the global photoresist market with a share exceeding 70%, is particularly vulnerable as it relies on the Middle East for a significant portion of its naphtha imports. The supply shock has already had a tangible impact, with spot prices for Japanese naphtha nearly doubling to US$1,190 per ton, according to Asia Business Outlook. This price surge has reportedly forced six of Japan’s 12 naphtha cracking centers to reduce their output, constricting the availability of the chemical precursors needed downstream. In response to the growing crisis, major Japanese photoresist suppliers have begun notifying key customers, including South Korean memory chip giants Samsung Electronics and SK hynix, of potential difficulties in procuring raw materials, according to reports first published by South Korean media outlet TheElec. The shortage is expected to have the most severe impact on the production of advanced semiconductors that use extreme ultraviolet (EUV) lithography, a process with extremely tight tolerances that is essential for manufacturing chips used in artificial intelligence, data centers, and advanced automotive systems. The problem extends beyond photoresists. The same geopolitical instability has also choked off the supply of another critical industrial gas. Qatar’s Ras Laffan facility, which produces approximately one-third of the world’s helium, has been offline since early March, as reported by EE Times. QatarEnergy has declared force majeure on its liquefied natural gas contracts, and because helium is captured as a byproduct of LNG production, its supply has been crippled. Ultra-pure helium is indispensable in semiconductor fabrication for cooling EUV systems, leak detection, and as a carrier gas, and its spot price has doubled since the crisis began. For chipmakers, finding immediate alternatives is not a viable option. The process of qualifying a new material supplier is complex and time-consuming, often taking a year or longer for cutting-edge production lines. Japanese chemical firms cannot easily pivot to suppliers in other regions like South Korea or China, as many share the same feedstock dependencies on Middle Eastern naphtha. The situation exposes a structural vulnerability in the highly specialized and geographically concentrated semiconductor supply chain. In our experience, very few mid-sized companies have a true grasp of their tier-two or tier-three supplier dependencies, which is where the real risk, as demonstrated here with naphtha, often lies. This crisis should be a wake-up call. The cost of inaction is far greater than the investment in proactive risk assessment. This is precisely where our supply chain optimization services become critical, helping clients identify hidden vulnerabilities before they escalate into production halts. For businesses looking to build resilience through a frank assessment of their global dependencies, C&S Finance Group LLC provides the necessary expertise at csfinancegroup.com. Beyond photoresists, the solvent shortage affects a range of other essential materials, including thinners, bottom anti-reflective coatings (BARC), spin-on hard masks (SOH), and temporary bonding adhesives used in the assembly of high-bandwidth memory (HBM) chips. This broad impact means that nearly every stage of advanced chip manufacturing faces some level of risk from the ongoing disruption in the Strait of Hormuz. Industry analysts and executives are now closely monitoring inventory levels at major foundries and the spot prices for key chemical precursors. The coming weeks will reveal whether chipmakers can secure alternative sources or re-engineer processes to mitigate the shortages, or if they will be forced to announce production cuts that could reverberate through the global economy.