LONDON (AP) — This week, Iran launched an attack on Qatar’s natural gas export facility. This escalation raises concerns not just for global energy markets but also for technology supply chains due to helium production. Helium, often associated with balloons, plays a crucial role in industries like chipmaking, space exploration, and medical imaging.
Qatar produces about one-third of the world’s helium, according to the U.S. Geological Survey. However, the production had to stop shortly after the tensions escalated three weeks ago. Recent Iranian strikes have raised fears of further disruption, with QatarGas estimating a 14% cut in helium exports.
The Importance of Helium
Helium is produced as a byproduct of natural gas extraction. Qatar’s Ras Laffan facility, the largest liquefied natural gas plant in the world, is a key site for helium production. However, following the attacks, QatarGas declared force majeure, indicating an inability to meet supply contracts due to external factors.
Phil Kornbluth, president of Kornbluth Helium Consulting, expressed that recovery will be challenging: “The best-case scenario might see some helium production resumed in six weeks, but that seems unlikely.”
Rising Prices
Helium prices have already doubled since the crisis began, and further increases are expected. Kornbluth noted that while spot trading makes up only 2% of the normal market, contract prices could see significant rises if disruptions persist.
Currently, helium supplies haven’t dwindled completely, but a shortage is on the horizon. Containers filled before the conflict began may soon run out, pushing the market to a tipping point.
Beyond Balloons
Helium is essential in semiconductor manufacturing, particularly for cooling wafers during chip production. Jacob Feldgoise from Georgetown University’s Center for Security and Emerging Technology explains, “Helium helps maintain a constant temperature during the etching process, making it irreplaceable in current operations.”
In the medical field, helium is crucial for MRI machines, and in aerospace, it helps purge rocket fuel tanks—a demand expected to rise with more frequent launches from companies like SpaceX.
Complex Supply Chains
Helium’s tiny molecules make it hard to store and transport. Once in gas form, it can escape through tiny gaps. Typically, Qatar’s helium is turned into liquid and transported in specialized insulated containers. However, about 200 of these containers are currently stranded in the Middle East, complicating the supply chain further.
Global Helium Sources
Aside from Qatar, the U.S. is the largest helium producer, followed by Algeria and Russia. U.S. geological reserves contain 8.5 billion cubic meters, while the rest of the world has around 31.3 billion cubic meters. However, Russian helium sales are hindered by sanctions.
Asian Chipmakers at Risk
The ongoing conflict has implications for South Korea’s semiconductor industry, which faces growing global demand, especially amid the AI boom. Fitch Ratings recently indicated that South Korea imports 65% of its helium from Qatar, putting major manufacturers like Samsung and SK Hynix in a precarious position.
While these companies currently have inventory, experts urge them to seek alternative sources. Jong-hwan Lee points out that even small disruptions can impact the entire manufacturing process. However, Kornbluth reassures that in cases of shortage, critical industries would be prioritized for helium supplies.
Samsung and SK Hynix have not commented on their strategies, but they are reportedly diversifying their supply routes. Taiwan Semiconductor Manufacturing Company has stated they are monitoring the situation, confident it won’t significantly affect them for now.
This situation underscores the intricate connections between geopolitical events and global supply chains, reminding us how intertwined our modern industries really are.
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