After the Iran War, what’s next for technology?

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Last week saw some progress, albeit with uncertainty and stagnation, toward ending the Iran war.

A two-week ceasefire was agreed on Wednesday, and although it appears fragile, hopes the conflict could be nearing an end are prompting analysts to look ahead and assess the long-term impact on the global tech industry.

Exports of helium, a key raw material for chipmaking and other manufacturing processes, have already been sharply reduced by the fighting, and some European companies are facing delays in semiconductor deliveries from Asia due to flight path disruptions. Experts also warn that a prolonged conflict will create uncertainty for future data center and AI infrastructure projects in the region.

Now, analysts say the month-and-a-half-long conflict in the Middle East has damaged its reputation as an investment destination and could prompt some backers to move their funds elsewhere in the world.

However, deep-pocketed local investors could help strengthen high-tech projects in the region, which remains attractive in the long term for international high-tech companies and investors, especially thanks to cheap energy and land availability.

Michael Field, chief equity strategist at Morningstar, said the dispute is likely to weigh on near-term investor confidence in the region.

“For many countries, this is a reminder of the need to prioritize national security and reduce cross-border investment.”

Simon Lapthorne, senior research analyst at Rathbones, said building AI data centers could also fall down the priority list of countries directly affected by the conflict.

“War inevitably increases uncertainty, which affects confidence and investment decisions beyond the region itself,” he said.

But the impact on high-tech projects in the Gulf region is more a matter of timing than a complete disappearance of demand, Lapthorne added.

Ian Fogg, technology industry analyst at CSS Insight, said attacks on data centers in the Middle East will make it difficult for countries to become major AI centers running workloads from customers in other regions, but demand for AI within the region should continue.

He added: “The business case for AI investment is likely to be focused on AI workloads that originate in the region and benefit consumers and businesses in the GCC region.”

Mehdi Pallavi, CEO of the International Data Centers Association think tank, said he expected some companies to diversify their investments into other regions such as Europe, Latin America and Asia-Pacific, but added: “The reality is that the Middle East region is too resource-rich to ignore.”

The region’s vast purchasing power of local investors, often supported by the state, is also likely to continue.

“We expect local sovereign wealth funds to continue to commit to capital projects in the region, which will provide support,” said Paul Markham, head of global equities at GAM Investments.

Outside the Middle East, the impact of the conflict is likely to remain in the technology industry for some time yet.

“The full impact of rising energy prices on the global economy is yet to be seen due to economic lag,” said CSS Insight’s Fogg. Rising energy prices can affect consumer demand for technology products because it affects disposable spending.

Data center operators, who spend millions on energy each year, could also be affected by the price hike.

Some point to the continuing effects of the helium shortage as a worrying trend.

“While helium is not a major cost factor, a disruption in supply could quickly become a constraint on chip production and have ripple effects across a wide range of industries,” Lapthorne said.

But for now, as the United States, Israel and Iran continue to struggle to find common ground, industry players can only speculate and hope the conflict ends soon.

The market is likely to remain volatile until a final solution is found. Only time will tell when and how that will happen.

On Wednesday, a federal appeals court in Washington, D.C., rejected Anthropic’s request to temporarily block the Pentagon from blacklisting the AI ​​company as a lawsuit challenging the sanctions unfolds.

Facebook’s parent company Meta, aiming to carve a niche in a market dominated by OpenAI, Anthropic and Google, debuted a major new AI model on Wednesday, its first since its expensive hire of Scale AI’s Alexandr Wang nine months ago.

AWS teams are working around the clock to maintain services in the Middle East after the drone attack, CEO Matt Garman told CNBC on Tuesday.

OpenAI’s Stargate project in the UK has been paused, with the company citing energy costs and the country’s regulatory environment.

Meta on Thursday committed to spending an additional $21 billion on CoreWeave’s AI cloud infrastructure.

Intel has soared about 20% since Monday (as of Thursday morning ET), a sign that the semiconductor giant may be starting to shed its reputation as a legacy player as partnerships with Google and Elon Musk’s Terafab project take off.