US Iran war impact on auto and EMS companies explained

Shares of automobile companies fell sharply on March 9 as investors reacted to concerns that the US Iran war could disrupt global semiconductor supply chains. The Nifty Auto index dropped about 3.6 percent in early trade, with all 15 stocks in the index trading in negative territory.

Auto component manufacturers were among the worst affected during the session. Shares of Uno Minda and Samvardhana Motherson declined nearly 6 percent each. Major vehicle manufacturers such as Tata Motors Passenger Vehicles, Ashok Leyland, Maruti Suzuki and Bharat Forge were also trading lower, with losses ranging between 4 percent and 5 percent.

Chip shortage risks for automobile production

Semiconductors play a critical role in modern vehicles, powering systems ranging from engine management to infotainment and safety features. Analysts say a disruption in chip supply could slow vehicle production and raise input costs for manufacturers.

If semiconductor availability tightens again, automakers may be forced to reduce output or delay deliveries, similar to the global chip shortage seen during previous supply chain disruptions.

Strait of Hormuz disruption and impact on semiconductor supply

The geopolitical tensions in West Asia have raised concerns about energy supply disruptions following the blockade of the Strait of Hormuz. The route is one of the world’s most important shipping channels for oil and natural gas.

Taiwan’s semiconductor manufacturing industry relies heavily on imported natural gas to power its energy intensive fabrication plants. Around 37 percent of Taiwan’s natural gas imports come from Qatar.

Natural gas supply key for chip manufacturing

With shipments from Qatar affected due to the blockade, analysts warn that prolonged instability could affect natural gas availability for Taiwan’s chip industry. Any disruption to energy supply could reduce semiconductor production and push chip prices higher globally.

This potential shortage has triggered investor worries across sectors that depend heavily on semiconductor components.

EMS companies face pressure from rising DRAM prices

Electronics manufacturing services companies have also been affected by the market reaction to the US Iran war. Several EMS stocks declined during trading as investors anticipated rising component costs and supply chain uncertainties.

Shares of Syrma SGS fell as much as 8 percent, while Dixon Technologies slipped around 3.5 percent and dropped below the ₹10,000 mark again, hitting a multi year low.

Rising memory chip prices add further challenges

Other EMS companies including Amber Enterprises, Kaynes Technology and PG Electroplast also declined between 3.5 percent and 8 percent. The sector has already been dealing with rising memory chip costs.

Brokerage firm Morgan Stanley maintained an underweight rating on Dixon Technologies and set a price target of ₹8,157, the lowest estimate for the stock on the market. The brokerage cited a TrendForce report which stated that DRAM prices could rise between 88 percent and 93 percent in the first quarter of 2026 and increase by another 20 percent to 25 percent in the second quarter.

Conclusion

The US Iran war has sparked fresh concerns about global semiconductor supply chains. Disruptions to energy shipments through the Strait of Hormuz could affect chip production, which in turn may impact automobile manufacturing and electronics assembly industries. The decline in auto and EMS stocks reflects investor fears that rising chip prices and supply constraints could create new challenges for both sectors in the coming months.