A 15 percent shortfall in global helium supply threatens to become the latest choke point for a semiconductor industry already grappling with geopolitical instability.
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Helium Shortage Threatens 15% of Global Supply for Chipmakers
The war in the Middle East has severed a critical artery in the semiconductor supply chain, knocking out 10 to 15 percent of global helium supply and threatening production for the world’s largest chipmakers. The disruption stems from a halt in natural gas production in Qatar, which is responsible for up to 40 percent of the world's helium, a gas essential for cooling the advanced lithography systems that produce chips for Nvidia, AMD, and TSMC.
"Because of oversupply of the gas before the war, helium will be 10 percent to 15 percent short of global demand," Phil Kornbluth, founder of Kornbluth Helium Consulting, said. The shortage has already prompted a US subsidiary of Air Liquide, a major gas supplier, to declare force majeure on some customers.
Helium is extracted almost entirely as a byproduct of natural gas wells. The conflict forced QatarEnergy to halt production, immediately cutting off a significant portion of global supply. While South Korean chipmakers like Samsung and SK Hynix report having helium stocks to last until at least June, the situation highlights the fragility of a supply chain dependent on a few key geographic locations.
For chipmakers, the cost of helium is negligible—about $10 out of a $15,000 advanced wafer—but its availability is non-negotiable. The alternative of shutting down a multi-billion dollar fabrication plant is so financially damaging that companies will pay almost any price to secure supply, effectively making the cost of unavailable material infinite.
Logistical Nightmare in a -269°C World
Unlike other industrial inputs, helium is exceptionally difficult to transport. It must be cooled to below -269°C and shipped in specialized, double-layered containers that can cost up to $1 million each. These containers are in short supply, and an estimated 10 percent of the world's fleet is now trapped inside the Strait of Hormuz.
"It’s another layer of fragility," said Carl Jackson, founder of Singapore-based SSoT Consulting. "These things are so expensive, you just need enough containers in your business to be able to operate your business." Global suppliers like Air Liquide, Linde, and Air Products face a complex logistical puzzle, deciding where to send their limited containers and which customers to prioritize.
No Cost Too High for Chipmakers
Helium's unique properties make it an irreplaceable coolant in extreme ultraviolet (EUV) lithography, the technology used to produce the most advanced 2-nanometer chips that power AI infrastructure. Demand is forecast to increase fivefold by 2035, according to research firm IDTechEx, as chip complexity grows.
Despite the supply crunch, the semiconductor industry is expected to be at the front of the line. During the last helium crisis in 2022-2023, suppliers prioritized chipmakers and medical sector clients while issuing force majeure notices to others. The latest notice from Air Liquide was directed at a leisure-sector customer, suggesting the party balloon industry will once again bear the brunt of the shortage.
"If the products that you want are in supply, chipmakers will pay whatever it takes to get it there," said US gas consultant Richard Brook. "They can afford to pay 10 times that amount... it’s still a tiny little percentage."
This article is for informational purposes only and does not constitute investment advice.
