Military conflict between Israel and Iran is not new. In June 2025, the two countries engaged in a 12-day conflict in which Iran’s nuclear infrastructure was also targeted. Although the conflict affected both sides, its broader economic impact was limited. Regional markets, including the smartphone market in the Middle East, Europe, Africa and the Americas, experienced only short-term volatility without structural disruption.

The latest escalation appears more complex and potentially longer in duration, supported by a larger military presence in the region, and a more strategic and serious target of changing the ruling regime in Iran. If the conflict extends, it could weigh more heavily on regional stability and global trade.

For the smartphone industry, logistics remains a key risk factor. The majority of global smartphone shipments are transported by air. Despite higher costs compared to sea freight, air transport is preferred due to the high value and short “shelf life” of smartphones. Faster shipping prevents inventory shortages and value depreciation, especially for new model launches. A prolonged Middle East crisis could therefore impact freight routes, operating costs and inventory planning across global smartphone markets.

Key Air Cargo Corridors Used for Device Freight

Source: FlightRadar24

OEMs utilize interconnected flight paths to supply key markets with smartphones across the Middle East, Europe, Africa and the Americas. Within this network, the Middle East plays a central role. Dubai International Airport in the UAE and Hamad International Airport in Qatar serve as major technical stops and cargo transshipment hubs. These airports enable cargo consolidation and redistribution before shipments continue to Europe, Africa or the US East Coast.

Amid the ongoing Middle East crisis, rerouting options are available but come with trade-offs. Shipments to Europe may shift toward Central Asian hubs such as Tashkent, while westbound cargo to the US East Coast may route via East Asia and North America. For African and some regional markets, alternatives such as Addis Ababa and Egypt may be used. However, these adjustments are basically a shift from efficiency to resilience.

More critically, Iran has announced the closure of the Strait of Hormuz, effectively disrupting a corridor that accounts for ~20% of the global oil supply, according to the US EIA data. This announcement has already triggered an immediate ~6% surge in oil prices as of March 2.

Oil prices are expected to remain under upward pressure as the geopolitical tensions escalate, particularly following reports of attacks on an oil tanker in the Gulf and Saudi ARAMCO’s decision to halt operations at the Ras Tanura refinery after a drone attack. These events are likely to further tighten energy markets, driving higher fuel prices and hence higher shipping costs.

On a normal day, a Boeing 777F, a long-range freight aircraft, typically consumes 7-8 tons of fuel per cruising hour, according to the AVIEX resource library, which is worth an average of $8,250 per hour according to EIA 2026 forecasts. Moreover, hiring two pilots for an over-14-hour flight in 2026 costs ~$12,000 according to Pelican Flight School Projections.

In many cases, rerouting adds at least two to three hours to flight time. Although this may seem marginal, an additional three hours of flying can translate into roughly $25,000 in extra fuel costs alone, in addition to potential groundhandling charges for stopovers, route and destination specific insurance premiums, and higher labor expenses. For longer detours extending total flight time to 12 to 14 hours or more, crew rest regulations may require doubling flight crews, potentially adding another ~$24,000 or more in labor costs.

The conflict impact also extends to the refurbished market. While new smartphones are shipped by air, spare parts used in refurbishment spaces are largely shipped by sea. Therefore, disruptions limiting access to Jebel Ali Port in Dubai, a key regional transshipment hub for spare parts, are creating more pronounced operational constraints for the refurbishment supply chain.

All these events are exacerbating the situation of an already strained smartphone supply chain, where elevated memory costs are weighing heavily on OEMs and constraining margin flexibility. If disruptions persist, overall logistics expenses continue to rise, including insurance adjustments and extended groundhandling time. While these increases may appear insignificant when spread across an aircraft carrying hundreds of thousands of smartphones, the added cost is layered onto an already thin per-unit logistics allocation. As a result, even small absolute increases can translate into meaningful percentage increases per device, gradually pressuring smartphone margins, pricing strategies and inventory planning across global markets.