Middle East Conflict Disrupts Global Helium Supply, Threatening Tech Industry

Iranian attacks on Qatar's natural gas facilities have forced the shutdown of helium production, creating potential shortages for semiconductor manufacturing and medical equipment. Qatar produces about one-third of the world's helium supply, which is essential for cooling computer chips and powering MRI machines.

LONDON (AP) — Recent Iranian strikes against Qatar’s natural gas production facilities have created a significant threat to worldwide technology manufacturing, as the disrupted helium output could impact everything from computer chip production to medical equipment operations.

While most people recognize helium as the substance that lifts party balloons, this gas serves critical functions in semiconductor manufacturing, rocket launches, and medical imaging equipment.

According to the U.S. Geological Survey, Qatar provides approximately one-third of global helium supplies, but the country was forced to suspend operations when conflict began three weeks ago. Following the most recent Iranian attacks on energy infrastructure, Qatar’s government-owned gas corporation announced helium shipments would decrease by 14%.

Understanding helium’s industrial significance:

Helium emerges as a secondary product during natural gas extraction through a process called cryogenic distillation. Qatar, which controls the planet’s largest individual natural gas reserve, generates roughly 30% of worldwide helium according to U.S. Geological Survey data.

The nation’s helium comes from the Ras Laffan complex, recognized as the globe’s most extensive liquefied natural gas operation. However, the state-controlled energy firm QatarGas stopped LNG production and related materials on March 2 following Iranian drone strikes, then announced force majeure two days afterward, indicating contractual obligations cannot be met due to uncontrollable circumstances.

Following additional Iranian bombardments on Wednesday and Thursday that targeted Ras Laffan again, QatarGas documented widespread destruction requiring years of reconstruction and reducing yearly helium shipments by 14%.

“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.”

Market prices for helium have increased twofold since the crisis began and will likely climb higher, Kornbluth explained.

However, immediate market trading represents only approximately 2% of total transactions during typical periods, he noted. Helium operates as a specialty commodity primarily distributed through extended agreements.

Nevertheless, contract costs “could go up a lot,” Kornbluth stated. “There’s lots of room for price increase if this is an extended outage.”

Kornbluth explained the supply shortage hasn’t materialized yet, since helium shipments that should have been loaded when fighting started in early March would require additional weeks to reach Asian destinations.

“Nobody’s run out of helium yet. But it’s a few weeks out when the shortage really hits.”

Helium plays a vital role in semiconductor production, including advanced processors used in artificial intelligence systems manufactured at Asian facilities.

The gas excels at heat conduction and transfer, making it perfect for quick cooling applications.

Semiconductor manufacturers utilize helium to reduce temperatures of wafers — silicon disks containing microscopic electronic pathways. The gas is employed during etching procedures, when deposited materials are removed from wafers to create transistor formations, explained Jacob Feldgoise, an analyst at Georgetown University’s Center for Security and Emerging Technology.

Throughout the etching procedure, “you really want to maintain a constant temperature over the wafer. And in order to do that, you need to be able to draw heat away from the wafer that’s being processed,” Feldgoise said. “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 keep heat removal consistent.”

Current semiconductor production methods lack any practical alternative to helium for wafer cooling, according to Jong-hwan Lee, a professor of semiconductor devices at South Korea’s Sangmyung University.

Healthcare facilities depend on helium to cool superconducting magnets that operate magnetic resonance imaging equipment.

Space companies utilize helium to clean rocket fuel storage systems, with demand projected to increase due to more frequent missions by organizations like SpaceX and Blue Origin.

Helium’s molecular characteristics create storage and transportation challenges.

As a gas, helium’s microscopic particles easily escape storage systems by seeping through even tiny openings.

Qatar’s energy company typically freezes helium into liquid state and stores it in specialized insulated vessels for shipment through the Strait of Hormuz. These custom containers maintain helium for 35 to 48 days. Beyond that timeframe, they begin heating up, causing helium to return to gas form and escape through safety release mechanisms.

Approximately 200 of these vessels remain trapped in the Middle East, Kornbluth reported. Each container costs roughly $1 million, so additional units aren’t readily available elsewhere.

“It’s going to take a fair amount of time to get these containers out of Qatar and to get them somewhere else where they might be able to be filled with helium,” he explained.

“So this initial period when you lose Qatar supply and have to rejig the supply chain and reposition containers, that’s going to be the worst part of the shortage most likely.”

Only a limited number of nations manufacture helium.

The United States leads production, generating 81 million cubic meters annually. Qatar, Algeria and Russia represent other major suppliers, though Russian materials are prohibited under United States and European Union sanctions.

USGS calculations show the United States possesses 8.5 billion cubic meters of extractable helium in underground formations, while other countries hold 31.3 billion cubic meters.

The conflict emphasizes the extensive international supply networks supporting South Korea’s semiconductor sector, which has experienced increased worldwide demand for its processors during the AI expansion.

Fitch Ratings released a report this week indicating the country — headquarters to Samsung Electronics and SK Hynix, the planet’s largest memory chip manufacturers — faces particular supply shortage risks because it imports approximately 65% of its helium from Qatar.

Samsung Electronics and SK Hynix probably maintain several months of stock, but they must urgently secure alternative sources, Lee emphasized, as the conflict could continue and potentially interrupt additional material supplies beyond helium.

Helium ranks among 14 semiconductor supply chain components the Seoul government monitors due to significant war-related vulnerability.

“Even disruptions affecting just a handful of materials could destabilize the entire semiconductor manufacturing process as each stage of production depends on the previous one,” Lee stated.

Nevertheless, a complete helium emergency remains unlikely, specialists indicated. During shortages, Kornbluth said the helium sector prioritizes distribution based on necessity, placing essential industries like chipmaking and healthcare first in line.

Since helium represents a minor portion of overall semiconductor production expenses, manufacturing facilities likely “would be willing to pay a higher price” to obtain supplies, Feldgoise noted.

Samsung and SK Hynix refused to answer questions regarding inventory levels or diversification strategies. The Korea Semiconductor Industry Association confirmed short-term supplies remain adequate and companies have been expanding their supply sources.

Major chipmaker Taiwan Semiconductor Manufacturing Company also stated it does not “anticipate any significant impact at this time” but will continue monitoring developments.