Bank of America Says ‘Iran Conflict Not a Threat to Semiconductors,’ Raises Estimates

Bank of America BAC -0.87% ▼ analysts see limited supply chain disruptions to the semiconductor sector from the ongoing Iran conflict. The firm raised its estimates for the global memory chip market, citing “unlikely” interruptions to chip production. BofA stated that memory chip makers hold “sufficient inventories” of key materials required in chip manufacturing, easing current supply chain pressures.

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Essential Elements of Chipmaking

Chip manufacturing relies on two key materials, helium and bromine, for cooling systems and etching computer chips, which are partly supplied from the Middle East. Yet BofA reported that memory chip makers have enough stock for 4-6 months, so shortages of these materials are not an immediate concern. The firm added that companies are diversifying suppliers by boosting orders from the U.S. and Japanese producers to mitigate Middle East risks.

Furthermore, BofA highlighted that worries about energy shortages are under control. Key chip-making areas like Taiwan, South Korea, and Japan use a lot of liquefied natural gas (LNG) to generate electricity, which is in short supply due to Middle East tensions. However, extra LNG shipments from the U.S., plus backup power options like coal or nuclear, can fill gaps amid global energy strains.

BofA Lifts Sector Forecast amid Stronger Pricing

The firm raised its outlook for memory chip prices and total industry sales, driven by firmer contract prices and rebounding demand, especially from AI data centers needing more DRAM (for temporary data processing) and NAND (for long-term storage like SSDs).

BofA boosted its Q1 2026 prediction for DRAM average selling prices (ASPs) due to tighter supplies. It also anticipates stronger NAND price gains from AI infrastructure growth and steady cloud computing demand. Global memory revenues are now expected to climb significantly this year, as the industry shakes off 2023-2025 slumps. The AI boom and better pricing for both DRAM and NAND will help firms like Samsung SSNLF +54.05% ▲ and Micron MU +5.13% ▲ recover profitability.

Which Is the Best Chip Stock According to Analysts?

We used the TipRanks Stock Comparison Tool to determine which chip stock is currently most favored by analysts. Wall Street has assigned a Strong Buy consensus rating to Micron, Marvell Technology MRVL +0.22% ▲ , Taiwan Semiconductor TSM +0.48% ▲ , and Broadcom AVGO -4.11% ▼ . Among them, AVGO stock offers the highest upside potential over the next twelve months.

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