Iran War Pressures South Korea’s IT and Home Appliance Industries

A manufacturing facility in Spain highlights the growing strain on global production networks as geopolitical tensions escalate. The ongoing military conflict involving the United States, Israel, and Iran has begun to shake the global energy and trade landscape. Rising crude oil prices, increasing logistics expenses, and higher raw-material costs are expected to place additional pressure on South Korea’s information technology and home appliance sectors.

Industry forecasts indicate that if the conflict continues for a prolonged period, production expenses for smartphone manufacturers and appliance makers—two of South Korea’s most significant export industries—will increase substantially. This cost surge may eventually translate into higher retail prices for consumers worldwide.

Rising Oil Prices and Their Impact on Businesses

The rapid escalation of oil prices has created significant concern among global industries. Military tensions involving the United States, Israel, and Iran have disrupted crude oil transportation routes in the Gulf region. As a result, international oil prices surged past $100 per barrel on the 9th before stabilizing in the $80 range after strategic petroleum reserves were released by several governments.

Despite the temporary drop, energy prices remain highly unpredictable as they continue to fluctuate depending on how the conflict develops. The situation is particularly critical because a large share of the world’s oil supply passes through the Strait of Hormuz. Estimates suggest that roughly 84% of oil shipments and 83% of natural gas transported through this narrow passage are destined for Asian economies.

Since many Asian countries—including South Korea—depend heavily on imported energy, any disruption in this route could significantly affect manufacturing, transportation, and industrial operations.

Logistics Costs Continue to Climb

Higher oil prices inevitably translate into increased transportation costs. Air freight and maritime shipping are becoming more expensive as fuel prices rise. This creates additional financial pressure for companies that rely on global supply chains to move components and finished goods.

Manufacturers in the electronics and appliance industries are particularly vulnerable because their production networks depend on international logistics systems. Increased freight costs mean that the price of delivering parts to factories—and shipping finished products to global markets—continues to climb.

According to sources within the home appliance industry, some cargo vessels carrying products have faced delays in departing for Middle Eastern destinations. This situation has begun affecting monthly sales performance while also creating complex discussions with insurance providers due to increased geopolitical risks.

Raw Material Prices Surging

In addition to energy and transportation expenses, raw material costs are also rising sharply. Metals used extensively in electronics and appliances have experienced noticeable price increases in Iran war pressures South Korea’s IT, home appliance sectors

Aluminum futures—commonly used in smartphones, home appliances, and other electronic devices—have seen a significant jump. On the 4th, three-month aluminum futures on the London Metal Exchange surged by 5.1% during trading, reaching $3,418 per ton. This marked the highest level recorded since April 2022.

The electronics manufacturing sector depends heavily on materials such as aluminum and copper. As these metals become more expensive, companies must absorb higher production costs or transfer those expenses to consumers through increased product pricing.

Potential Increase in Electricity Rates

Electricity prices may also rise as a result of escalating global fuel costs. During the Russia-Ukraine conflict in 2022, industrial electricity tariffs were raised approximately seven times, resulting in a total increase of around 70%.

If oil prices continue to climb due to tensions involving Iran, policymakers may again consider adjusting electricity tariffs. This would create additional challenges for industries with high energy consumption, including semiconductor manufacturing and display production.

The issue is particularly important as demand for artificial intelligence technology expands rapidly. Data centers, semiconductor fabrication plants, and AI-related infrastructure require enormous amounts of electricity, meaning that higher energy prices could significantly affect operational profitability.

Manufacturing Costs and Consumer Prices

For companies producing electronics and home appliances, the combination of rising oil prices, increasing raw material costs, and growing logistics expenses is difficult to avoid. Manufacturing costs are therefore expected to increase across the sector.

When production costs climb, companies often pass a portion of the burden on to consumers through higher retail prices. This trend could affect products such as smartphones, televisions, refrigerators, and other household electronics that are exported globally by South Korean manufacturers.

To manage these challenges, several IT companies are reportedly adjusting their inventory management and shipping strategies. By reorganizing supply chains and distribution schedules, businesses hope to reduce the financial impact caused by higher transportation costs.

Global Smartphone Demand Could Slow

Industry analysts warn that weakening global consumer demand may further complicate the situation. Economic uncertainty combined with higher product prices could lead to reduced purchasing activity in the electronics market.

Market research firm Counterpoint Research predicts that worldwide smartphone shipments may decline by approximately 12.4% compared to the previous year. The firm estimates total shipments could fall to around 1.1 billion units.

This decline comes at a time when memory chip prices have already increased. The additional logistical uncertainty created by geopolitical tensions in the Middle East may further shrink the size of the smartphone market.

Growing Pressure on Technology Companies

Technology firms may soon face what analysts describe as a “triple pressure” scenario: rising energy costs, increasing raw material prices, and escalating logistics expenses. Each of these factors directly affects manufacturing operations and profitability.

Industry insiders emphasize that while declining profit margins are a concern, the larger risk lies in slowing global consumption. If consumers delay purchasing new electronic devices due to economic uncertainty, companies could experience both higher costs and lower sales simultaneously.

In such an environment, the ability to adapt supply chains, manage production efficiently, and respond quickly to market changes will become increasingly important for South Korea’s IT and home appliance manufacturers.