Hundreds of millions of dollars’ worth of helium are sitting in the Middle East
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As liquid helium heats up, it turns back to a gas and escapes containment – giving it an effective shelf life
The war in Iran is threatening the global supply of helium, an essential component in cooling chip-making tools.
That means the AI sector is straining under another resource issue, alongside the reduced supply of oil being shipped down the Strait of Hormuz.
The World Trade Organisation warned earlier this month that the reduction in oil supply could “crimp” the global AI boom.
Helium is a natural gas by-product, meaning it must be refined from naturally occurring gas fields and shipped in its supercooled liquid form.
The gas is an excellent heat conductor and used in many industries. For example, chip makers use it to maintain stable temperatures in the production of advanced semiconductors; the healthcare industry uses it to cool the superconducting magnets inside MRI scanners; and the space industry uses it to purge rocket fuel tanks.
While helium is common in the universe as a whole – the second most-common element after hydrogen – it is rare on Earth. Most of the world’s supply comes from the USA, but about a third comes from Qatar, just across the Persian Gulf from Iran.
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Qatar, which supplies about a third of the world’s helium, ships all of it through the Strait of Hormuz – which Iran has closed due to the US-Israeli war
The closure of the Strait of Hormuz has choked the global supply of helium and threatens the production and operation of everything from chips to space rockets.
Although it will take time for the shortage to be felt, “suppliers are already telling some customers to expect supply cuts and surcharges,” according to the Wall Street Journal.
That is especially true because helium has an effective shelf life. Liquid helium constantly absorbs heat and eventually turns back into a gas. When the pressure in a container gets too high, the gas escapes.
Most containers will hold helium for 35-48 days. Hundreds of such containers are now stuck in the Middle East.
Direct helium buyers typically lock in their supply through long-term contracts, but are now “scrambling” to secure short-term spot market cargoes. Prices have already more than doubled, and some buyers, especially South Korean chip makers, are looking to new sources like US providers.
Ralf Gubler, research director at S&P Global Energy, said the helium supply issue “highlights a deeper vulnerability in the AI build‑out: extreme dependence on a small number of geopolitically exposed nodes.”
That is similar to how the AI industry as a whole, as well as the US economy, is propped up by a small number of companies – a situation sounding alarm bells at organisations like the IMF.