Iran Attacks Threaten Helium Supply Chain – Chipmakers, Energy Markets at Risk

LONDON (AP) — Iran’s escalating conflict with Qatar has triggered a halt in helium production at Qatar’s Ras Laffan facility, threatening disruptions to global technology supply chains. Although widely recognized for its use in party balloons, helium is a critical component in the manufacturing of semiconductors, medical imaging, and space exploration.

Qatar, responsible for approximately 30% of the world’s helium supply according to the U.S. Geological Survey, suspended production on March 2 following initial drone attacks by Iran. Further strikes on Wednesday and Thursday have resulted in “extensive” damage, with QatarGas projecting a 14% reduction in annual helium exports. “It makes the story worse,” said Phil Kornbluth, president of Kornbluth Helium Consulting. “Your best case scenario would be you’re back producing some helium in six weeks or something like that. As it looks right now, that’s highly unlikely.”

The immediate impact on helium spot prices has been significant, doubling since the conflict began, and further increases are anticipated. However, spot trading represents a small fraction – around 2% – of the overall helium market, which is largely governed by long-term contracts. Kornbluth indicated that contract prices “could go up a lot,” particularly if the outage persists. While a physical shortage hasn’t yet materialized, due to existing helium in transit, Kornbluth predicts shortages will begin to be felt within weeks as current supplies are depleted.

The semiconductor industry is particularly vulnerable. Helium’s exceptional thermal conductivity makes it indispensable for cooling silicon wafers during the chip manufacturing process. During etching, a crucial step in creating transistor structures, maintaining a consistent temperature is paramount, and helium facilitates efficient heat removal. “Helium is an excellent thermal conductor. And so chip fabs will blow helium over the back of the wafer in order to speed heat removal and preserve heat removal consistent,” explained Jacob Feldgoise, an analyst at Georgetown University’s Center for Security and Emerging Technology. Jong-hwan Lee, a professor of semiconductor devices at South Korea’s Sangmyung University, stated there is currently no viable substitute for helium in this process.

Beyond semiconductors, the medical industry relies on helium to cool the superconducting magnets used in magnetic resonance imaging (MRI) machines. The space industry utilizes helium for purging rocket fuel tanks, a demand expected to increase with the growing number of launches by companies like SpaceX and Blue Origin.

The logistical challenges surrounding helium further complicate the situation. Due to its molecular properties, helium readily escapes containment, necessitating its transportation in a super-cooled liquid state within specialized, heavily insulated containers. These containers, capable of holding helium for 35 to 48 days, are currently stranded in the Middle East, with approximately 200 units caught in the disruption. Each container costs around $1 million, limiting the availability of replacements. Kornbluth emphasized the time required to reposition these containers and re-establish the supply chain, anticipating this initial period to be the most challenging phase of the shortage.

While Qatar is a major producer, the United States currently holds the largest recoverable helium reserves, with 8.5 billion cubic meters, compared to the global total of 31.3 billion cubic meters, according to USGS estimates. However, supplies from Russia are restricted due to U.S. And European Union sanctions.

South Korea’s semiconductor industry, heavily reliant on imports – approximately 65% of its helium supply comes from Qatar – is particularly exposed. Samsung Electronics and SK Hynix, the world’s leading memory chip manufacturers, are estimated to have several months of inventory, but experts urge them to accelerate efforts to secure alternative sources. The Korean government has identified helium as one of 14 critical materials vulnerable to disruption from the conflict. Lee warned that disruptions to even a small number of materials could destabilize the entire semiconductor manufacturing process.

Industry experts suggest that in the event of a severe shortage, helium would be allocated based on criticality, prioritizing essential industries like chipmaking and healthcare. Feldgoise noted that, given helium’s relatively small contribution to overall semiconductor production costs, manufacturers would likely be willing to absorb higher prices to maintain supply. Samsung and SK Hynix declined to comment on their inventory levels or diversification plans. The Korea Semiconductor Industry Association stated that short-term supplies are adequate and that companies are actively diversifying their supply routes. Taiwan Semiconductor Manufacturing Company also stated it does not “anticipate any significant impact at this time” but will continue to monitor the situation.