First, they came for fuel.
Then fertiliser.
Now, price rises are coming for computer chips and AI.
And it’s all because half the world’s helium gas comes from the Middle East.
You may think of party balloons and squeaky voices.
But the ultralight gas is a vital ingredient for many advanced technologies – especially the semiconductors driving the artificial intelligence revolution.
Heavy demand for chips and memory has already seen prices soar.
Now, helium scarcity will add to cost pressures.
Helium can reveal the tiniest of leaks in pressure-sensitive equipment.
It cools the superconducting magnets used by the high-resolution sensors of medical MRI machines.
It cools the high-precision machines used to etch silicon chips into computing cores.
And it blows the finest grains of damaging dust out of their production lines.
This is why chipmakers “not only need a lot of it, but they need it all the time,” semiconductor consultant Patrick Wilson told Foreign Policy.
Shortages now seem certain to affect silicon chip production.
Despite repeated reassurances, the Strait of Hormuz remains closed to traffic.
And that means everything from missiles and smartphones to AI assistants and medical scans will become more expensive.
“Prices have surged, supply has tightened, and companies across the semiconductor industry are scrambling to secure material,” writes Peterson Institute for International Economics analyst Robert Lawrence.
Economic stranglehold
Iran just won’t give up.
US and Israeli forces have destroyed more than 13,000 targets and all but eliminated Tehran’s air and sea forces.
But the Islamic fundamentalist regime has discovered it has a weapon far more effective than a handful of nuclear missiles. The mere threat of sea mines has caused tanks, bulk carriers and container ships to drop anchor.
And that’s choking global supplies of oil, gas, fertiliser, helium, sulphur – and helium.
“IRAN HAS JUST ANNOUNCED THAT THE STRAIT OF IRAN IS FULLY OPEN AND READY FOR FULL PASSAGE,” US President Donald Trump proclaimed on social media the day news of the current ceasefire broke.
More than two weeks later, passage through the misnamed “Strait of Iran” (actually the Strait of Hormuz) remains effectively closed off.
Traffic has slowed to a trickle.
Before the war, up to 150 ships would pass through each day. According to an updating dashboard produced by the United Nations, that’s now down to less than a handful.
It has taken weeks for the last ships to leave the Gulf and reach their destinations.
So, some 60 days after the war started, those deliveries have largely dried up.
Helium is extracted from raw natural gas.
Qatar alone produced about one-third of the world’s supply. But its Ras Laffan Liquefied Natural Gas facility has been bombed. And the Strait of Hormuz remains closed.
Spot market prices have already doubled.
“But since the commodity is mostly traded through long-term contracts – and the global transportation of helium containers entails a longer lag time – more pain could be on the horizon,” Foreign Policy reports.
That lag time just got longer.
Tehran insists it has no intention of reopening the Hormuz Strait.
“Foreigners who come from thousands of kilometres away to act with greed and malice there have no place in it – except at the bottom of its waters,” Khamenei told Iranian media Thursday.
Hot words, lighter-than-air results
“The lesson is stark: Even if flows resume within weeks, restoring Ras Laffan to full capacity could be a three-to-five-year process,” Lawrence explains.
It’s a scenario worse than that facing the fuel and fertiliser sectors.
Analysts say it would take between six and nine months for the flow of crude oil, natural gas, urea and sulphur to once again meet demand.
And rebuilding the damaged Qatari gas facility is just part of the problem.
That’s because the same properties that make helium especially useful in advanced manufacturing also make it immensely difficult to store and transport.
It must be chilled to -269.15 Celsius (near absolute zero) to become a liquid. As a gas, the lightness of its molecules enables it to “boil off” and escape.
That is why helium balloons go flat overnight.
That is why helium is immensely expensive to transport. And to stockpile.
Which is why “just in time” helium delivery strategies figure prominently in chip producer profit calculations. As with fuel, food, fertiliser and medicine – that strategy is once again proving immensely vulnerable to supply disruptions.
The Gulf isn’t the only producer of helium. The United States accounts for about 45 per cent of the global supply.
But it doesn’t have the same extent of infrastructure as Qatar to chill it and ship it. And the superpower abandoned the idea of stockpiling the critical resource in the 1990s as too expensive.
Australia’s only production facility, in Darwin, closed in 2023. This followed the depletion of the Bayu-Undan gas field. None of the operators of Australia’s other extensive natural gas resources are bothering to tap this specialist by-product. Their profit margins are already impressive enough.
Neglecting this resource will soon return to bite Canberra. In the budget bottom-line.
“Helium may be light. Its strategic importance is anything but,” argues Lawrence.
“[But it] is a non-substitutable input into critical technologies, with supply chains that are both concentrated and geopolitically exposed.”
