Days after the US and Israel launched airstrikes against Iran and killed Supreme Leader Ali Khamenei, Iran’s Islamic Revolutionary Guard Corps declared the Strait of Hormuz – the narrow waterway through which about a fifth of the world’s oil passes – closed. While oil has dominated headlines, a third of the world’s commercial helium comes from Qatar and has also been cut off.
Often associated with party balloons, helium is indispensable for magnetic resonance imaging (MRI) scanners, space travel and the production of microchips for artificial intelligence. Once the strait is closed, the 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 has been flooded with surpluses, dampening the war’s immediate impact. “There’s going to be a shortage,” says Phil Kornbluth, founder of Kornbluth Helium Consulting. But the big question, he says, is the duration.
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“There are three helium plants in Qatar, and two of them produce helium from the off-gas of LNG (liquefied natural gas) plants,” says Kornbluth. The LNG is loaded onto tankers whose only route to the sea is through the Strait of Hormuz. “When the Strait of Hormuz is closed, when the LNG storage tanks are full, they have to be closed,” he says. Military attacks against Qatar’s facilities have also contributed to the closure of the facilities.
While worrying, the math is far from catastrophic. With a 30 percent loss of global capacity offset by a recent 15 percent overhang, Kornbluth estimates a net shortfall of about 15 percent. Suppliers pump most of the world’s helium into 11,000-gallon cryogenic containers that are loaded onto trucks and cranes onto cargo ships. The supply chain is long and slow: Helium that was shipped out of Qatar just before the war started may still be on the way. “There is no physical shortage right now at the end-user level,” says Kornbluth. “It’s kind of like a nice sunny day at the beach, but you’ve heard there’s a tsunami out there. You need to get away.”
Because the industry relies on roughly 2,000 expensive helium tanks, many of which are now stuck in Qatar or on cargo ships en route, the initial pinch will be felt worse until those tanks are repositioned. Even if the strait opened tomorrow, says Kornbluth, the supply interruption will last at least two more months.
Major suppliers are likely to declare force majeure and raise prices, following the handbook of the four previous shortages over the past 20 years.
But this shortage comes just as the semiconductor industry has become the largest consumer of helium, overtaking MRI scanners in recent years. Chip makers try to keep helium reserves, but the gas is notoriously difficult to contain. “Helium can leak out at about 0.1 to 1 percent per month, depending on how good the gaskets are,” says Lita Shon-Roy, president and CEO of TECHCET, a semiconductor materials consulting firm. “It’s never a good gasket or fitting. It just leaks over time.”
Historically, chipmakers have kept as little inventory on hand as possible. But after pandemic shocks to the supply chain, she says, manufacturers shifted from keeping days of inventory to storing.
If the war continues, the regions that will feel the impact first are those dependent on Qatar: Japan, Singapore, South Korea and Taiwan – home to the world’s most advanced chip fabrication facilities, or fabs.
In chipmaking, manufacturers rely on helium most crucially during etching — the selective removal of material to give a chip its properties. An advanced AI chip can pack tens of billions of transistors, which requires extreme precision. “You have to image it, define a pattern and then etch out unwanted materials,” says Mike Corbett, managing partner and co-founder of Linx Consulting. “Etching can 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 will be different based on the temperature.” To maintain stability, fabs blow helium gas on the back of wafers to draw heat away. Helium’s exceptional thermal conductivity makes it uniquely efficient.
Can fabs replace a cheaper gas like argon or nitrogen? “If there are cheaper options, they’ve gone to them already,” says Corbett. Helium provides better throughput – more wafers are processed per hour. In an industry where a single advanced factory can cost billions of dollars, the economics of yield dictate the materials. “Helium is less than 1 percent of the cost of a machined wafer,” says Corbett. “So you’re not going to shut down a fab because you have to double the price of helium.”
Tile plants also carefully control the quality of each material that enters the plant. They need helium that meets very strict cleanliness standards, which means they can’t easily switch suppliers without months of requalification. “Once a process is established and set up, it’s very difficult to change,” says Corbett.
Some manufacturing sectors have developed closed-loop recycling — capturing and reusing helium after it passes through the process tools — but for chips, says Corbett, “it’s not being used.” Historically, factories have not invested in piping and mechanical systems for helium recapture because the gas has always been seen as cheap enough to release into the atmosphere.
But Corbett doesn’t expect chip makers to run out—suppliers are allowed to prioritize critical applications during shortages, and helium will just be redistributed. Kornbluth agrees. “MRI can get everything they need because it’s a medical application, and semiconductor chip manufacturers generally get a pretty high allocation,” he says. “And then, as you might expect, party balloons get smaller. They might get nothing.”
