-- The Middle East conflict reveals gaps in the capacity of Asian technology companies to buffer against increased costs, S&P Global Ratings said in a Monday release.
The rating agency considers high-end chip producers as faring well when increasing prices, backed by favorable demand and solid investment in AI data centers.
However, consumer electronics have the weakest ability to pass through costs, while electronics manufacturers would also be exposed to dampened demand under a protracted war, S&P said.
In S&P's base-case scenario, under which the Strait of Hormuz's closure eases in April, its rated technology firms in the region have solid financial ability to cushion against the impacts, credit analyst Cathy Lai said.
A prolonged conflict would hit larger tech firms' supply chain and impact electronic product makers' margins and demand, Lai said.
Most producers, as well as logistics companies, will be vulnerable under disruption to power supply and some key raw materials, S&P said.
Regions reliant on liquefied natural gas and oil imports from Qatar and other Middle Eastern countries house most advanced semiconductor manufacturers, with Taiwan being the most vulnerable, the rating agency said.
For crucial raw materials, helium is the most susceptible given its use in semiconductor manufacturing, although S&P believes leading companies have ample helium inventory to offset near-term risk.
Companies with solid supply chains and investment in the AI market will potentially retain their credit profiles, while those dependent on commoditized consumer segments will see greater pressure, Lai said.