The ongoing conflict in the Middle East, specifically the Iran War, has the potential to create a global microchip crisis, and it's not just about oil and gas. One unexpected victim of this war is the microchip industry, which relies heavily on a seemingly insignificant element: helium.
Helium, a noble gas, is an essential component in semiconductor manufacturing. It's used to create optimal conditions during chip fabrication, ensuring precise alignment and exposure of photomasks. Its unique properties, such as chemical inertness and low thermal conductivity, make it irreplaceable in this process.
What many people don't realize is that helium is a byproduct of liquified natural gas (LNG) production, and LNG suppliers are often the major exporters of helium. This means that when supply chains are disrupted, as they are now due to the war, semiconductor manufacturers are left scrambling for alternative sources.
Take South Korea, a major semiconductor producer, for example. Several companies there heavily rely on Middle Eastern states, particularly Qatar, for their helium imports. In 2025, Jukan, a South Korean company, sourced around 64% of its helium from Qatar. Together with Taiwan, South Korea accounts for a significant chunk of global semiconductor production, around 36%.
The recent drone strikes on QatarEnergy's Ras Laffan facility, which provides almost a third of the world's helium, has had immediate and drastic consequences. The facility's closure led to a 30% cut in the global helium supply, causing a ripple effect throughout the semiconductor industry.
The Strait of Hormuz, a key trade corridor in the Persian Gulf, is now almost completely closed due to the conflict. This has not only caused the biggest oil supply disruption in history but has also severely impacted various supply chains between Europe and Asia.
While the United States is the largest global producer of helium, it may not be able to meet the sudden spike in demand. Russia, another major producer, is also out of the question due to sanctions imposed after the Ukraine invasion.
South Korean companies like Samsung, SK hynix, and TSMC are now facing the prospect of decreased output until they can find alternative helium suppliers. The global demand for semiconductors is growing, driven by the rapid adoption of advanced technologies like AI, and these companies are worried about meeting their orders.
The duration of the Iran War and the broader Middle East conflict remains uncertain. If it continues for an extended period, the helium supply disruption will likely drive up semiconductor prices in the mid-term.
This situation highlights the vulnerabilities of the semiconductor supply chain. Major microchip-producing countries are heavily dependent on a few key suppliers, and the current conflict is forcing them to consider alternative sources and diversify their supply chains. It's a reminder that even the most advanced industries are not immune to the impacts of geopolitical tensions.
In my opinion, this crisis could be a catalyst for much-needed supply chain diversification and regional collaboration in the semiconductor industry. It raises the question: how can we ensure the resilience of critical industries in the face of such disruptions?
