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The conflict is exposing the deep energy vulnerabilities of Korea\u2019s chip industry.<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The Iran conflict has triggered dramatic economic effects across the globe, but despite its location far away from the warzone, South Korea has felt outsized shocks. The country\u2019s stock market\u00a0plunged 18 percent<\/a>\u00a0in just four trading days\u2014the worst drop since the 2008 financial crisis\u2014and\u00a0wiped out more than $500 billion in market value<\/a>\u00a0as the energy security disruption has cascaded through Korea\u2019s semiconductor-heavy stock market.<\/p>\n But the market panic was only the surface symptom, exposing a deeper structural weakness in Korea\u2019s economy. South Korea suffers from a persistent energy vulnerability, and geopolitical shocks can quickly translate into acute economic pain. When these shocks threaten the conditions that allow major industries\u2014particularly\u00a0Korea\u2019s booming semiconductor trade<\/a>\u2014to operate smoothly, the entire economy feels it immediately.<\/p>\n In other words, the Iran war and closure of Hormuz did not create this problem. Instead, it revealed how a decades\u2011old dependence has become far more dangerous for an energy-poor economy.<\/p>\n Korean industry depends on power generated largely from imported fossil fuels\u2014especially oil and liquefied natural gas (LNG). Fossil fuels\u00a0dominate Korea\u2019s energy mix<\/a>: oil accounts for 36.6 percent of primary energy use, followed by coal (22.3 percent) and natural gas (19.7 percent). And South Korea imports roughly\u00a070 percent of its crude oil from the Middle East<\/a>, according to data from the Korea International Trade Association.\u00a0Virtually all of that oil<\/a>\u00a0travels through the Strait of Hormuz.<\/p>\n<\/div>\nThe Energy Constraint on Korea\u2019s Chip Economy<\/h3>\n
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