Hydrogen Fluoride Price Surge Threatens Global Memory Chip Supply Chain Amid Hormuz Disruption

The ongoing conflict in Iran and subsequent closure of the Strait of Hormuz continue to expose vulnerabilities in global supply chains, particularly for high-tech semiconductor manufacturing. New reports indicate that anhydrous hydrogen fluoride, a critical material in chip production, is facing severe supply constraints and dramatic price increases that will directly impact South Korean memory manufacturers by July 2026.

Anhydrous hydrogen fluoride serves as an essential etching and cleaning material in semiconductor fabrication, used to remove oxide films and metal contaminants from silicon wafers. This chemical compound is derived from fluorite and sulfuric acid, with sulfuric acid production dependent on sulfur—a byproduct of crude oil and natural gas refining. The disruption in Iranian oil supplies has directly impacted sulfur availability, creating a domino effect throughout the chemical supply chain.

China, which accounts for approximately 70% of global anhydrous hydrogen fluoride production, has implemented export restrictions on sulfuric acid due to its critical importance in domestic fertilizer production, steel manufacturing, and battery cathode material synthesis. These restrictions, combined with reduced mining output in China's Zhejiang Province following a mining accident, have created perfect conditions for a pricing crisis.

According to market analysis from Echemi, the price of anhydrous hydrogen fluoride in China increased by approximately 3% in the first week of April 2026 alone. This increase was driven by a 27% week-over-week surge in sulfuric acid costs, which itself resulted from rising sulfur prices. By mid-April, the price of hydrogen fluoride had risen by as much as 130% compared to early-2026 levels, with sulfuric acid accounting for over 50% of total production costs.

South Korean chemical companies Soulbrain, ENF Technology, and Foosung have begun receiving higher-priced orders of anhydrous hydrogen fluoride in mid-May. These firms process the material by mixing it with ultrapure water and ammonium fluoride to create the high-quality etching solutions required by Samsung and SK Hynix. Rather than absorbing these increased costs, the chemical manufacturers are projecting that they will pass these expenses directly to the memory chip manufacturers by early July at the latest.

This situation echoes a previous crisis in 2019 when a trade dispute between Japan and South Korea resulted in restrictions on hydrogen fluoride exports. At that time, Japan supplied over 40% of South Korea's hydrogen fluoride, and the export controls effectively cut off 87.9% of supply, according to a 2023 CEPR report. The disruption forced South Korea to diversify its sourcing, increasing imports from the U.S. and Taiwan while strengthening trade relationships with China.

Despite the severity of the 2019 disruption, the impact on consumer memory pricing was minimal. Spot and contract prices rose temporarily, but large inventories of memory chips prevented significant price increases at the retail level. The situation in 2026 presents a starkly different scenario, with global memory chip shortages already in place and no inventory glut to buffer supply concerns.

Unlike the 2019 incident, which proved relatively short-lived, the current hydrogen fluoride shortage may have more persistent implications. However, South Korea has proactively invested in domestic production capabilities to mitigate such risks. Fluoride Korea, a subsidiary of U.S.-based BGF EcoMaterials, has invested approximately $100 million in a new anhydrous hydrogen fluoride plant in Ulsan with a projected annual capacity of 50,000 tons—roughly half of South Korea's total demand. This facility is scheduled to come online by Q4 2026, potentially alleviating long-term supply constraints as global sulfur prices continue to surge.

The memory chip industry, already navigating unprecedented demand and supply challenges, now faces an additional cost pressure that will likely translate to higher consumer prices. Samsung and SK Hynix, which control approximately 60% of the global DRAM market and 50% of the NAND flash market, will need to determine how much of this increased cost burden to pass through to OEMs and ultimately consumers.

The broader semiconductor industry is watching closely, as similar supply chain vulnerabilities could impact other critical materials essential for chip manufacturing. The situation underscores the delicate balance of just-in-time manufacturing in an increasingly volatile geopolitical landscape, where regional conflicts can rapidly transform into global economic consequences.