Malaysian Chip Industry Watches Helium Shortage Risks Amid Middle East Conflict

Semiconductor companies in Malaysia are closely tracking potential helium supply disruptions caused by Middle East conflicts, though no operational impacts have occurred yet. The country handles about 7% of global semiconductor trade and 13% of chip assembly operations.

Semiconductor manufacturers operating in Malaysia are keeping a close eye on potential helium supply chain disruptions stemming from ongoing Middle East conflicts, according to an industry leader who spoke with Reuters on March 18.

The price of helium has surged significantly as natural gas processing operations in Qatar face disruption from the U.S.-Israel conflict with Iran. This essential gas, which serves as a crucial component in semiconductor manufacturing and medical imaging equipment, comes as a secondary product from liquefied natural gas processing. Any reduction in production capacity is anticipated to impact worldwide availability.

According to Wong Siew Hai, who leads the Malaysia Semiconductor Industry Association, chip manufacturers around the globe, including facilities operating in Malaysia, maintain stockpiles and use multiple suppliers to minimize immediate threats.

“While the current situation has heightened awareness and heightened risk monitoring, it has not yet translated into clear reported supply disruptions for Malaysian semiconductor operations,” Wong stated.

“However, Malaysian chipmakers are likely watching developments and managing risk through diversified sourcing, inventory buffers, and supply chain engagement, similar to their regional peers,” he added.

Wong explained that Malaysian operations focusing primarily on packaging, testing, and assembly face lower exposure to helium supply challenges since they can largely function using nitrogen instead.

The Southeast Asian nation hosts suppliers and manufacturing facilities that support major semiconductor companies including Intel Corp, along with European firms Infineon and STMicroelectronics. Malaysia processes approximately 7% of worldwide semiconductor commerce and handles roughly 13% of global chip assembly, testing, and packaging operations.

Fitch Ratings issued a statement Tuesday warning that Asia’s semiconductor supply network confronts increasing threats from helium supply constraints as the Iranian conflict continues, with credit risks potentially worsening if shortages surpass existing inventory reserves.