Last month, QatarEnergy declared force majeure on long-term liquefied natural gas (LNG) contracts to buyers in Europe and Asia following severe damage to its Ras Laffan production facilities by Iran’s missile strikes. This disrupted ~20% of global LNG supply and triggered a sharp spike in natural gas prices. Thankfully, gas prices have pulled back to pre-war levels, with natural gas markets coping remarkably well with the loss, thanks to expected volumes to be delivered to the market outweighing current and expected reductions over the next few years. It’s all helping to tame natural gas prices.
But the same cannot be said about another vital industrial gas: Helium.
Curtailed LNG production by Qatar, coupled with blocked shipping lanes in the Strait of Hormuz, has disrupted up to 35% of global helium supply, negatively impacting the pivotal semiconductor chip manufacturing industry.
QatarEnergy suspended helium production following attacks on its LNG facilities, which produce a third of the world’s helium as a byproduct of liquefied natural gas. To exacerbate matters, Qatari shipments are physically blocked from reaching global markets with the critical chokepoint effectively closed to Western commercial shipping. The closure of the Strait of Hormuz has stranded approximately 33% of the world’s specialized cryogenic ISO containers.
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Because liquefied helium evaporates in about 45 days, stranded inventory cannot be held for long, leading to a long-lasting supply gap.
The semiconductor chip manufacturing sector has been among the hardest hit by the helium shortage.
Major manufacturers like Taiwan Semiconductor Manufacturing Company (NYSE:TSM), Samsung (OTCPK:SSNLF) and SK Hynix rely on the region for over 60% of their helium, with the shortage potentially impacting production of a wide range of electronic products from smartphones and gaming consoles to laptops, hard drives, and AI data center GPUs.
Most semiconductor fabs only keep about one week of working inventory on-site, with the immediate inventory clock estimated at roughly 45 days before production, before rationing starts despite the existence of strategic reserves at the national level.
Helium is an essential gas used in semiconductor manufacturing to enable precise chip fabrication, primarily for cooling silicon wafers, controlling chemical reactions, and detecting leaks in vacuum systems. During thermal processes like plasma etching, helium acts as a coolant to prevent silicon wafers from warping or becoming damaged. Its exceptional thermal conductivity allows for the fast, precise cooling necessary for shrinking circuitry in advanced chips. Helium also carries reactive gases across wafers during chemical vapor deposition (CVD), ensuring precise material deposition. Being an inert gas, helium prevents oxidation and unwanted chemical reactions during fabrication, protecting the purity of semiconductors.
