If the war in Iran and the subsequent closure of the Strait of Hormuz have shown anything, it's how vulnerable the just-in-time global supply chains are to disruption — especially high-tech chip manufacturing. Now there's a new concern on the horizon, with new reports suggesting that rising prices for anhydrous hydrogen fluoride for South Korean chip firms could cause a new spike in memory and storage prices.
Used in the etching and cleaning steps to remove oxide films and metal contaminants from wafers, anhydrous hydrogen fluoride is derived from fluorite and sulfuric acid, the latter of which is primarily produced from sulfur, a byproduct produced when refining crude oil and natural gas. The war in Iran has reduced critical supplies and refining capacity for those key materials, and sulfur supplies have also suffered; the knock-on effect is set to reach South Korean chip firms once again, The Elec reports.
Canary in the Hydrogen Fluouride mines
Despite the U.S. war in Iran beginning in February, it's taken time for the domino effects of the subsequent clampdown on oil and gas refining and transportation to be felt; but the first smaller dominoes to fall began weeks ago.
At the beginning of April, Echemi reported that because of cost pressures, the price of anhydrous hydrogen fluoride in China had risen by around three percent in just the first week of the month. This was mostly driven by rising sulfuric acid costs, which jumped 27% week on week, caused by rising prices for sulfur.
There were already signs of slowing supply, though, with Echemi reporting some suppliers were projecting reduced output due to an inability to acquire raw materials. This, coupled with a shutdown of fluorite mines in the Zhejiang Province due to a mining accident, placed further pressure on the anhydrous hydrogen fluoride supply chain.
The Elec reports that China's response was to restrict exports, resulting in a mid-April price rise for hydrogen fluoride of as much as 130% over early-2026 levels, with sulfuric acid making up more than 50% of the overall production costs for the key material.
South Korean chemical companies Soulbrain, ENF Technology, and Foosung have started receiving these higher-priced orders of scarcer anhydrous hydrogen fluoride in mid-May. Before shipping them on to Samsung and SK Hynix, they'll mix it with ultrapure water and ammonium fluoride to create a high-quality etching material.
But they aren't going to eat those costs themselves. They're now forecasting that those costs will then be passed on to South Korean chip firms by early July at the latest.
History does rhyme
This isn't the first time a shortage of anhydrous hydrogen fluoride has threatened to upend memory industry pricing. In 2019, a trade dispute between Japan and South Korean resulted in a restriction on the sale of hydrogen fluoride to South Korea, raising the potential of memory shortages and pricing reactions.
At the time, Japan supplied over 40% of South Korea's hydrogen fluoride, but the export controls proved decidedly effective, cutting off 87.9% of the supply, according to a 2023 CEPR report. This forced South Korea to pivot and import more of the material from the U.S. and Taiwan, and improve its trading relationship with China in order to better secure chemical materials.
Despite this disruption, the effect on memory pricing for consumers was minimal. Spot and contract prices rose over material cost and supply concerns, but large inventories of memory meant that OEMs and consumer-facing retailers didn't raise their prices much in response.
Although the trade dispute between South Korea and Japan didn't end until 2023, the supply restrictions for hydrogen fluoride only caused a temporary adjustment in memory prices. By the end of Q3 2019, storage and memory prices had fallen for several months in a row, showing no long-term effect.
Unfortunately, 2026 is not like 2019. There is no glut of memory chips to buffer material supply concerns. There's a global shortage. And now what little is being made for consumers is going to be notably more expensive to produce.
This is one shortage that could be short lived
There's not much that can be done to avert the impending material cost spike for memory makers, and though they are making unprecedented profits, they're unlikely to absorb the cost increase themselves.
Fortunately, then, while there are going to be many long-term effects of the war in Iran, anhydrous hydrogen fluoride shortages for South Korean memory companies may be somewhat short-lived.
For several years, South Korea has been working to improve local production of this key material. Fluoride Korea, a subsidiary of U.S.-based BGF EcoMaterials, has invested around $100 million in building a new anhydrous hydrogen fluoride plant in Ulsan that has a projected annual capacity of 50,000 tons — around half of South Korea's demand.
Unlike memory fabrication lines that aren't projected to begin production until 2027 or 2028, though, this plan is set to come online by Q4 2026. While that will take time to spool up, and there is some international interest from Japan, which is also looking to diversify its supply chain away from China, this could be the new supply South Korean chemical firms need to avert a more-long term disaster as global sulfur prices continue to surge.
