Samsung and LG on High Alert over Israel-Iran Conflict... Logistics and Oil Prices as Key Variables

No Immediate Damage, but Oil Price Surge Would Have Inevitable Impact
Samsung, LG, and LS on High Alert Amid Rising Tensions in the Middle East
Tariff Negotiations May Stall Due to Trump’s Involvement

Amid the military conflict between Israel and Iran, South Korean companies targeting the Middle Eastern market are on high alert. Samsung Electronics and LG Electronics have evacuated all local employees and are currently reviewing concerns regarding the potential prolongation of hostilities. If the situation escalates, the impact from rising logistics costs and oil prices will be inevitable.

According to industry sources on June 17, Samsung Electronics and LG Electronics evacuated all expatriate employees and their families working in Israel to safe neighboring countries such as Jordan over the past weekend. Samsung Electronics has operated a sales subsidiary, a semiconductor research and development (R&D) center, and the multi-camera development company Corephotonics in Israel. LG Electronics has a sales office and Cybellum, an automotive cybersecurity solution company acquired in 2021.

As of May 2025, Samsung Electronics holds the top position in the Israeli smartphone market with a market share of approximately 51.2%. Considering that Apple, the runner-up, holds only 26.4%, this represents a commanding lead. LG Electronics is also focusing on the market with its OLED TVs and is classified as a major home appliance company in Israel. The size of the Israeli smart TV market was estimated to be about $900 million as of last year.

If the conflict between Israel and Iran escalates, Samsung Electronics and LG Electronics are highly likely to suffer negative effects on their home appliance sales. However, in terms of global sales, the proportion is not significant, so immediate visible damage is understood to be limited. An industry official said, "It is too early to discuss damages or losses at this point," but added, "We are closely monitoring how the situation develops and are reviewing necessary measures."

When conflict erupts in the Middle East, the first sectors of industry to be hit are 'oil prices' and 'logistics costs.' If Israel and Iran intensify attacks on each other's infrastructure, oil prices are highly likely to surge. After Israel struck Iran's nuclear facilities, international oil prices have already jumped by more than 7%.

The rise in oil prices directly translates into higher logistics costs and production costs for domestic companies. The Korea International Trade Association's Institute for International Trade and Commerce estimates that a 10% increase in oil prices leads to a 0.32% decrease in exports.

Another industry official said, "Even if the short-term impact is minor, if the war drags on, manufacturing costs will rise," adding, "We are also considering the possibility that this could lead to a general contraction in global demand."

On the 15th (local time), the Iron Dome, Israel's missile defense system, was activated to intercept Iran's missile attack targeting Tel Aviv, Israel. Photo by AP Yonhap News

There are also considerable concerns about rising tensions in the Middle East, often referred to as the 'powder keg of the world.' In addition to Samsung Electronics and LG Electronics, LS Group is expanding its presence in the region. In December 2023, LS Group signed a memorandum of understanding (MOU) with Saudi Arabia's National Industrial Development Center (NIDC) and has since broadened the scope of cooperation. This move aligns with the Saudi government's plan to reduce dependence on the oil industry and attract manufacturing, and with LS Group's need to secure future growth engines for its key affiliates, such as subsea cables and renewable energy facilities.

Currently, LS Cable & System and LS Electric have entered the Middle Eastern market. An industry official said, "If conflict spreads in the Middle East, the global energy market may contract, so we are watching for any potential negative impact."

Some observers are also concerned about the impact on Korea-US tariff negotiations, given that US President Donald Trump is directly involved in the Israel-Iran situation. As the issue draws attention to the Middle East, there are concerns that the US may not reach a meaningful conclusion by July 8, the deadline for mutual tariff suspensions among countries.

Scott Besant, US Secretary of the Treasury, who is leading country-by-country trade negotiations, hinted at the possibility of an extension during a congressional hearing on June 11 (local time). While an extension of the negotiation deadline would give companies more time to respond, it would also prolong tensions at the national and industry levels, which is considered a significant burden.