Intel, AMD and chip stocks sell-off: what if US-Iran conflict drags on?

US chip stocks are extending losses on July 13 as Washington and Tehran lock horns in a dangerous new phase of open hostility.

Over the weekend and into Monday morning, the US Central Command (CENTCOM) launched heavy airstrikes targeting about 140 Iranian military installations, and Iran retaliated against regional US bases and declared the critical Strait of Hormuz closed.

And while a geopolitical crisis of this magnitude naturally triggers a broad Wall Street sell-off, it stands to prove uniquely catastrophic for semiconductor stocks.

Far from just an “oil shock” or general market panic, the US-Iran war is super bearish for the chip sector, threatening to choke the lifeblood out of the global technology sector.

Intel INTC, AMD and other chip stocks fell on Monday's session. Intel declined by 4% while AMD and Broadcom fell by 2%.

Why US-Iran war is a major threat to chip stocks

When investors think of the Middle East, they think mostly of crude oil – but for chipmakers, the region holds an entirely different, irreplaceable prize: noble gases and critical minerals.

Qatar alone accounts for over one-third of the global supply of helium, an element indispensable to high-end semiconductor fabrication.

Pure helium is absolutely critical for heat management, ultra-precise temperature regulation during wafer processing, and the delicate photolithography steps required to print modern AI circuitry.

With the Ras Laffan industrial facilities previously suffering disruption and the Strait of Hormuz now entirely blocked by Iranian forces, the global supply chain for these specialized materials has ground to a halt.

Without viable structural alternatives for helium and bromine, top-tier foundries face immediate production throttling, directly harming revenue generation.

Why the downside is particularly pronounced in 2026

The re-ignition of this war couldn’t come at a worse time for a semiconductor sector aggressively pricing in an artificial intelligence (AI) boom.

Tech companies are spending hundreds of billions on AI data centers, leaving chip designers and manufacturers operating on ultra-tight timelines and vulnerable supply lines.

As the closure of the Strait forces massive maritime detours and sends jet fuel prices skyrocketing, air and sea freight surcharges are inflating exponentially.

Semiconductor manufacturing is a multi-step global relay race; raw materials, silicon ingots, and packaged chipsets cross oceans multiple times before final assembly.

Escalating regional warfare piles huge logistical costs onto a capital-intensive industry, squeezing corporate margins and forcing analysts to drastically cut earnings estimates for the world’s most valuable chip stocks.

What to expect from chip stocks moving forward?

The swift back-and-forth between Washington and Tehran has shattered any illusions of a brief, contained skirmish.

Instead, Wall Street is realizing that this conflict is beginning to mirror the grinding, multi-year reality of the Russia-Ukraine war – one that defies quick diplomatic or military resolution.

If this war drags into a prolonged war of attrition, the related supply chain bottlenecks threatening the semiconductor sector could harden into a permanent economic drag.

For a chip industry heavily exposed to cyclical downturns and priced for perfection on the back of the AI boom, an extended Middle Eastern conflict could derail earnings.

With no off-ramp in sight, chip stocks are bracing for a highly turbulent and deeply bearish second half of 2026.