When the Iran war began on Feb. 28, one of the first things Americans noticed was how rapidly gas became much more expensive. Higher fuel prices are undoubtedly hitting people's household budgets, but the impact isn't just limited to people; plenty of companies are feeling it in their wallets as well.
Taiwan Semiconductor Manufacturing Company (TSM +6.30%) probably isn't the first name you'd think of when listing companies that would be affected by a war in the Middle East, but its operations require tons of electricity, as well as other elements that are feeling the impact.
Image source: The Motley Fool.
TSMC manufactures many of the semiconductors used in most technology products and data centers. It isn't your regular factory operation, either. Fabricating chips takes specialized facilities and a host of specific materials, including numerous special gases (like helium and hydrogen) and chemicals.
TSMC uses these gases and chemicals for tasks such as cooling its fabs, maintaining the precise operating conditions, and vital cleaning processes. Unfortunately, due to the war, the supply chains for many of those commodities have become disrupted, and what is still available is more expensive. On its latest earnings call, TSMC's chief financial officer noted that this could affect its profitability, but said it was too early to estimate by how much.
The company sources from multiple suppliers across different regions, so it has enough materials for its near-term operations, but the issues are worth keeping an eye on, as it may need to replenish its supplies again while prices remain inflated. Its 50.5% net profit margin in the first quarter was 7.4 percentage points higher than Q1 2025.
