Helium, critical for tech, faces supply chain crisis

The world's helium supply is facing a shortage seven months after Iranian strikes on a Qatari gas facility and the effective closure of the Strait of Hormuz. A range of industries are feeling the impact with no end to the war in sight. 

While most people associate helium with party balloons and squeaky voices, this finite and irreplaceable natural resource is critical for modern life. Without helium, there are no smartphones, cars, MRI machines, rocket launches, or missiles.

Helium is also challenging to extract and transport, according to Cliff Cain, the president of a helium exploration company. It needs to be kept at 452 degrees below zero Fahrenheit in transit. Once released into the atmosphere, that's it for helium – it's gone. Cain said he's spent decades warning that the complicated supply chain is vulnerable to disruption, with the helium supply concentrated in too few locations: Algeria, Poland, Russia, Qatar and the United States, with the bulk coming from the latter two countries.

"All it takes is a few of those to fall and the whole supply chain comes unraveled," he said.

What does the Iran war have to do with helium?

The closure of the Strait of Hormuz in February trapped one-third of the global helium supply in the Persian Gulf. Then, Ras Laffan, the facility that produces all that helium in Qatar, was hit by Iranian strikes in March, further rattling supply chains.

Ras Laffan is the world's largest facility for natural gas, and its byproduct, helium. After the strikes, the Qataris said it would take at least three years to get the facility back in full operation. Ras Laffan did not respond to requests for comment about the extent of the damage to the helium infrastructure specifically. 

Qatar is the second largest producer of commercial helium in the world after the U.S. Most of the U.S. helium comes from a single Wyoming facility, according to the Wyoming Energy Authority, and U.S. helium exports are up 70% since the war began, according to export data from the US Census Bureau.

But the U.S. can't offset the shortage indefinitely, and the longer the war with Iran continues, the tighter the global supply chain of helium gets. Spot prices on helium have tripled since the start of the war, according to Rich Brooke, a former executive at Air Liquide, one of the six major international helium suppliers. 

Companies in South Korea, Taiwan and Singapore are now looking to the U.S. for helium, and it's not clear how long the U.S. can accommodate that demand. It depends on how long the war lasts. For now, some helium suppliers are drawing from their reserves, which are stored in deep, underground salt caverns. 

"If you can tell me what's going to happen in the Strait of Hormuz between now and three months from now, I can tell you exactly what'll be happening in the helium business. Unfortunately, you can't, and so I can't," Brooke said. 

Helium: More than something for balloons 

With war ongoing, the Pentagon has asked some defense contractors to quadruple their production capacities of certain weapons. That worries Cliff Cain because helium is needed for weapons development, he says.

"You can't make modern warfare without helium. And that's just a fact," Cain said. "You've heard about the missiles, the hypersonics. Without helium, you can't make the fiber optics. You can't produce the munitions. You can't produce the electronics that goes on these things. And so if you don't have helium, your opportunity to make war becomes even more difficult."

The nonrenewable natural resource is also used in scientific research, including at Joe Sachleben's University of Chicago lab. The lab uses helium in nuclear magnetic resonance machines to develop breast cancer drugs, immunotherapies and treatments for Alzheimer's disease.

While helium is naturally a gas, it becomes a liquid if it gets cold enough — the coldest on Earth. Every couple of months, Sachleben pours 100 liters (roughly 26 gallons) of helium onto magnets in the lab to stabilize them at 452 degrees below zero. 

"Once it gets to a critical level, we have to put helium back in the magnet to keep it cold," he said. "If that doesn't happen, we break the magnet"

There's no substitute, no work-around.

Helium is also critical for many electronics. One-fifth of the world's helium is consumed by the semiconductor industry, according to the Compressed Gas Association. Polar Semiconductors outside Minneapolis manufactures chips for car engine systems, servers in data centers and the U.S. military. 

Around 40-50% of the machines in a fab, the ultra clean area where they manufacture the semiconductors, use helium in some way, according to Polar's President and COO Surya Iyer. Hundreds of steps in the process involve helium. No helium? Everything gets shut down. 

The helium crisis is hitting at a time when Polar is planning to double production capacity to roughly 140 million chips a month. 

"The AI data centers are growing [a] lot of demand for semiconductors. Electrification is growing demand for semiconductors," Iyer said. "And that means the demand for helium is going to be growing for a long time."

What's being done about the limited helium supplies

Polar is able to hedge its helium reserves by relying on three suppliers. Still, the company has felt the effects of the shortage. One of its suppliers has put them on allocation — essentially a rationing program. 

Sachleben's supplier also hit his lab with the rationing plan. 

"They basically have said, 'Well, we'll give you 50% of what you used last year.' That doesn't help us," Sachleben said. "And so what we have to do is decide which machines are we going to sacrifice and which one are we going to try to keep."

His lab found a backup supplier, but that supplier is unable to guarantee helium deliveries. Then last month, he got a message saying that supplier was about to run out. Sachleben said he's not feeling hopeful about getting the helium he needs as the war in Iran continues.

"I don't see an end to the current conflict," he said. "And even if we do have an end to the conflict, it'll take a while for the supply lines to get going again."