The Iran war disrupts global helium supply and artificial intelligence chipmakers

Days after the United States and Israel launched airstrikes against Iran, killing Supreme Leader Ali Khamenei, Iran’s Islamic Revolutionary Guard Corps declared closed the Strait of Hormuz — the narrow waterway through which about a fifth of the world’s oil passes. While oil dominates the headlines, a third of the world’s commercial helium comes from Qatar and has also been disrupted.

Often associated with party balloons, helium is essential for magnetic resonance imaging (MRI) scanners, aerospace, and the manufacturing of microchips for artificial intelligence. With the strait closed, disruption to the global helium supply chain could have ripple effects that could last for months and affect the most advanced technologies on Earth.

Yet the crisis comes at a time when the helium market is full of surpluses, mitigating the immediate effects of the war. “There’s going to be a shortage,” says Phil Kornbluth, founder of Kornbluth Helium Consulting. But the big question, he says, is how long it will last.

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“There are three helium plants in Qatar, and two of them produce helium from LNG waste gas. [liquefied natural gas] “When the Strait of Hormuz is closed, once the LNG storage tanks are full, they have to stop,” he says. Military attacks on Qatari facilities also contributed to the closure of factories.

Although worrying, the calculations are far from catastrophic. With a 30 percent loss in global capacity offset by a recent 15 percent supply surplus, Kornbluth estimates a net shortage of around 15 percent. Suppliers pump most of the world’s helium into 11,000-gallon cryogenic containers that are loaded onto trucks and transferred to cargo ships. The supply chain is long and slow: Helium shipped from Qatar just before the war began may still be on its way. “There is currently no physical shortage at the end-user level,” says Kornbluth. “It’s kind of like a beautiful sunny day on the beach, but you heard there was a tsunami there. You need to get out of the way.”

Given that the industry relies on around 2,000 containers of expensive helium, many of which are now stuck in Qatar or on cargo ships en route, the initial difficulties will be even worse until those tanks are repositioned. Even if the strait opened tomorrow, Kornbluth said, the supply disruption would last at least two more months.

Major suppliers will likely declare force majeure and raise prices, following the pattern of four previous shortages over the past 20 years.

But the shortage comes just as the semiconductor industry has become the largest consumer of helium, overtaking MRI scanners in recent years. Chipmakers try to conserve reserves of helium, but the gas is notoriously difficult to contain. “Helium can leak about 0.1 to 1 percent per month, depending on the quality of the seals,” says Lita Shon-Roy, president and CEO of TECHCET, a semiconductor materials consulting firm. “There’s never a good seal or connection. It just leaks over time.”

Historically, chipmakers have kept as little inventory as possible. But after pandemic shocks to the supply chain, she says, manufacturers shifted from carrying several days of inventory to stockpiling.

If the war continues, the regions that will feel the effects first are those dependent on Qatar: Japan, Singapore, South Korea and Taiwan, home to the world’s most advanced chip manufacturing factories.

In chipmaking, manufacturers rely on helium crucially during etching, the selective removal of material to give a chip its characteristics. An advanced AI chip can contain tens of billions of transistors, requiring pinpoint precision. “You have to imagine it, define a pattern, and then eliminate the unwanted materials,” says Mike Corbett, managing partner and co-founder of Linx Consulting. “The etch could literally be done hundreds of times per wafer. You have to control the temperature very precisely. I can’t etch one wafer at 100 degrees Celsius and then the next at 150 degrees Celsius, because the etch profile would be different depending on the temperature.” To maintain stability, factories blow helium gas onto the backs of the pads to remove heat. The exceptional thermal conductivity of helium makes it particularly effective.

Could manufacturing plants substitute a cheaper gas like argon or nitrogen? “If there are cheaper alternatives, they’ve already chosen them,” says Corbett. Helium offers better throughput: more slices processed per hour. In an industry where a single advanced manufacturing plant can cost billions of dollars, yield economics dictate materials. “Helium represents less than 1% of the cost of a processed wafer,” says Corbett. “So you’re not going to shut down a manufacturing plant because you’re going to have to double the price of your helium.”

Chip mills also carefully control the quality of each material entering the facility. They need helium that meets very strict cleanliness standards, which means they can’t easily change suppliers without months of requalification. “Once a process is established and implemented, it is very difficult to change it,” Corbett explains.

Some manufacturing sectors have developed closed-loop recycling — capturing and reusing helium after it passes through processing tools — but for chips, Corbett says, “it’s not being used.” Historically, manufacturing plants have not invested in piping and mechanical systems for helium recovery because the gas has always been considered cheap enough to release into the atmosphere.

But Corbett doesn’t expect chipmakers to burn out: Suppliers are allowed to prioritize critical applications during shortages, and helium will simply be reallocated. Kornbluth agrees. “MRI could get whatever they need because it’s a medical application, and semiconductor chip makers typically get a pretty high allocation,” he says. “And then, as you might expect, the party balloons get less. They might get nothing.”