The Middle East war cut off roughly a third of the world’s supply of helium, but the semiconductor industry didn’t even blink, according to a Wall Street Journal report published Thursday. Chip makers were one step ahead thanks to a diverse network of suppliers, backed by extensive helium storage caverns and on-site inventories, the Journal reported.
Helium is a byproduct of natural gas production and essential for manufacturing advanced semiconductors, rocket propulsion, and cooling MRI machines. Qatar, which accounts for around 30% of global helium supply, was forced to halt production of liquefied natural gas early in the conflict after Iranian attacks on Ras Laffan, an industrial hub north of Doha. Shipments out of the country also stalled after Iran closed the Strait of Hormuz.
As helium supply tightened, spot prices more than doubled early in the war on fears that shortages would disrupt the semiconductor industry, the Journal reported. But the feared crunch never materialized.
“The main reason for the resilience is that semiconductor companies have almost no sensitivity to high helium prices,” Andrei Quinn-Barabanov, Moody’s supply chain industry practice lead, told the Journal. “In other words, chip companies have margins that allow them to outbid nearly all other users of gas to secure adequate supplies.”
About a quarter of all helium goes to chip companies, and existing caverns hold more than the industry’s annual consumption, according to Quinn-Barabanov.
Gas suppliers have been building new storage capacity. Linde, the world’s biggest industrial-gas supplier, commissioned one of the largest helium storage caverns — with a capacity of more than 3 billion cubic feet — in Beaumont, Texas, last year. Air Products, a major helium distributor, said drawing on its storage cavern in Beaumont allowed it to service clients despite curtailments from Qatar.
Chip makers maintained operations by relying on long-term contracts with suppliers. French industrial-gas supplier Air Liquide recently said it would provide high-purity gases to South Korea’s SK Hynix, the Journal reported. Samsung Electronics in April tapped Air Products for industrial gases at a semiconductor facility in South Korea.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker and a supplier to Nvidia and Apple, said earlier this month that it didn’t expect any significant impact from supply disruptions. German chip maker Infineon Technologies said production hadn’t been affected. STMicroelectronics, a key supplier to Apple, Tesla and SpaceX, reported no operational impact.
Alternative sources have also cushioned the market. The U.S., the world’s largest helium producer, has supported global supply through extensive storage infrastructure and export capacity. Oxford Economics said shipments of rare gases — including helium — rose sharply in recent months, the Journal reported.
“Between the industry’s ability to absorb high prices and the U.S. national interest in supporting semiconductor output, the helium supply would have to tighten significantly before semiconductor manufacturers could face serious disruption,” Quinn-Barabanov said.
Qatar is preparing to resume LNG shipments, sending empty carriers back through the Strait of Hormuz for the first time in months as U.S. and Iranian officials negotiate the terms of a peace agreement, the Journal reported. State-owned operator QatarEnergy didn’t immediately respond to a request for comment.