 "Nvidia halts production of China-bound H200 AI chips as Beijing-DC tech tussle revives. (File Photo/Reuters)")
Helium, an integral part of chip production, has witnessed a halted supply after the US’s attack on Iran disrupted gas processing in Qatar. Amid price escalations and supply trends showcasing bleak momentum, the helium shortage could be the next big challenge for tech giants to grapple with.
Reports suggest that chip makers are already paying premiums to secure helium, mainly from the US, while suppliers have told -tech in Asia.com that Samsung Electronics and SK Hynix have four to six months of inventory.
While chipmakers hold inventories that might help them in production till June, prices can jump up fast, as apparent by the spot helium, which rose as much as 40% in a week. Analysts said it could reach $2,000 per 1,000 cubic feet (MCF) if supply stays tight.
Taiwan has been able to spread the purchases more widely and procured about 30% of its helium supplies from Qatar and another 30% from the US. Diversification ensures that companies like TSMC have more room to adjust.
New chip making practices to flood the market
Tech giants have already started finding a way out of the jeopardy. Samsung has started using its in-house helium reuse system (HeRS) on select production lines since April last year. Qatar Energy has pointed out that the attacks have damaged 17% of its LNG export capacity, and a full recovery may take three to five years, and hence resource-saving systems are a strategic need of the hour.
Since helium is extracted as a byproduct of LNG, the suspension of LNG operations has effectively frozen helium output. This situation has removed approximately 5.2 million cubic meters of helium from the market each month, tightening an already strained supply chain.
Helium is used to manufacture advanced chips, as it is a key enabler of ultra-clean and ultra-cold environments required throughout fabrication. The gas is used for wafer cooling during the photolithography process and for leak detection in complex sub-5 nanometer chip manufacturing. Helium is functionally irreplaceable in these precision-driven, high-yield applications, thanks to its lowest freezing point of any element. While Sony is the first major manufacturer to have halted production, amid the shortage similar incidents are expected in future as well.