Helium supply is tightening around the world as disruptions to the production of this critical gas in Qatar threaten industries that depend on helium. The production disruption was triggered by the Iran conflict.
When Israel and the U.S. launched Operation Epic Fury at the end of last month, Qatar halted production at Ras Laffan. This facility is the largest helium production plant globally and meets about one third of worldwide helium demand. As a result of this disruption, the price of helium has doubled on global markets.
Prices could further hike by between 25% and 50% if production in Qatar remains offline for an additional 60 to 90 days, according to experts. In such a scenario, the price of each thousand cubic feet of this gas could exceed $2,000. This would take the price to about four times higher than it was before the outbreak of the war.
What makes this supply disruption even more worrying is the fact that it is nearly impossible to stockpile helium since its molecules escape from the most sophisticated systems of storage that exist.
Manufacturers of semiconductors are at a high risk of having their production processes disrupted if the shortage of helium gets worse. This is because helium is critical during the process of etching chips. The gas is also used to cool wafers and detect leaks in chips measuring less than 5 nanometers. Without this gas, it is therefore impossible to manufacture advanced processors.
While other countries like the U.S., Poland, Russia and Algeria also produce this gas, existing supply chains and the challenges involved in transporting helium make it hard to reroute supplies from other sources to countries like South Korea and Taiwan where most chip fabrication takes place.
If the shortage persists for a lot longer, fabs could be forced to either give priority to producing the highest earning chips only or even suspend production if helium becomes prohibitively expensive or is inaccessible due to sustained production disruption in Qatar.
The ripple effects of helium supply disruption would send shockwaves through the tech industry, with infrastructure projects like data center construction facing higher input costs, schedule delays, increased costs of power and many other shocks. Tech firms like Broadcom Inc. (NASDAQ: AVGO), for example, that derive revenue from supplying software solutions to clients in the data center, software, networking and industrial users of semiconductors could see reductions in their earnings as a result of shocks to helium supply on the global market.
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