'Chip output at risk': business warned of raw material shortages due to war with Iran

Helium shortages amid the conflict in the Middle East have begun to affect global supply chains in the technology sector. Chip manufacturers and their suppliers are forced to urgently seek alternative sources of raw materials, Reuters reports citing industry representatives. In case of prolonged disruptions, helium shortages could affect a wide range of industries - from electronics to the automotive industry, the agency's interlocutors warned.

Helium, which is a byproduct of natural gas processing, is used in several key stages of chip production - including cooling, leak detection and high-precision processes, Reuters writes.

The conflict in the Middle East has led to a shortage of this raw material, Jerry Zhang, head of sales of Swiss semiconductor components manufacturer VAT in China, told the agency. The war in the Middle East, he said, is affecting chip production both in his company and other market players. Additional pressure is created by delays in logistics, Zhang noted. The company is looking for alternative sources of supply, including the US, he said.

The disruptions affect not only helium supplies, but also other supply chains of chip makers, Reuters writes. The delays, in particular, affected some types of raw materials supplied from Israel, the agency said the director of strategic marketing division MRSI (production of equipment for chip assembly) of the Swedish company Mycronic Zhou Limin. He did not specify what kind of raw materials we are talking about, noting, however, that the disruptions increase the delivery time of components, which ultimately affects customers - suppliers are forced to extend the terms of execution of orders.

Helium spot prices doubled between the start of the Middle East crisis and mid-March as buyers sought to secure supplies, Phil Kornbluth, president of Kornbluth Helium Consulting, said. His estimate was cited by Reuters on March 12.

The helium market is organized differently than most commodity markets: the bulk of supplies are made under long-term contracts rather than through a transparent spot market. This means that price signals are formed slowly, even when supply is reduced, the agency explains.

This lack of transparency makes pricing difficult. However, as early as March 12, after the suspension of the largest LNG plant in Qatar, Anish Kapadia, head of AKAP Energy, a research company, said: "The first data shows an increase in helium spot prices by about 50%. With prolonged supply disruptions, prices could rise sharply and approach the peak of past shortages of more than $2,000 per thousand cubic feet, he said.

IndexBox CEO Alexander Romanenko noted that disruptions lasting 30 days can lead to a 10-20% increase in helium prices, while disruptions lasting 60-90 days can lead to a 25-50% increase in helium prices.

Helium supplies are geographically highly concentrated, with Qatar supplying almost a third of the global volume, according to data from the U.S. Geological Survey cited by Reuters. Qatar plays a key role in the LNG market: according to the U.S. Geological Survey, the country will produce about 63 million cubic meters of helium in 2025 out of about 190 million cubic meters of global supply.

The largest share of helium consumption in the U.S., as of February 2026, is "analytical, engineering and scientific applications" (22%), according to the U.S. Geological Survey. Another 17% or so of U.S. helium is used in semiconductor manufacturing, fiber optics and other processes that require a controlled environment. Another 17% comes from helium's use as a lifting gas, such as in balloons, weather balloons and airships. Medicine - primarily MRI (15%) - accounts for a significant share. The remainder is accounted for by aerospace (9%), welding (8%), diving and leak detection (5% each), while other applications account for around 2%.

A spokesman for French industrial gas group Air Liquide also warned of the risk of a short-term helium shortage on March 25.

With helium shortages, companies have few quick solutions other than to slow production and prioritize the most critical products, said Cameron Johnson, senior partner at consulting firm Tidal Wave Solutions. "Helium shortages are a serious problem" and many expect the situation to be resolved soon, Reuters quoted him as saying.

A prolonged helium shortage, he said, could lead to a reduction in chip production and affect a wide range of industries, from electronics to the automotive industry. "Against the backdrop of [helium] shortages, companies may start to reduce production volumes or even stop producing chips. If that happens, the consequences will affect electronics, cars and even smartphones," Johnson noted.

This article was AI-translated and verified by a human editor