China's helium export ban rattles semiconductor supply chain already hit by West Asia crisis
Experts say leading fabs have enough inventories for now, but a prolonged disruption could force production cuts and prioritisation of high-margin AI chips.
- Jul 16, 2026,
- Updated Jul 16, 2026 10:23 AM IST
A gas that rarely attracts attention outside semiconductor factories is emerging as the industry's latest supply chain headache.
China's temporary ban on helium exports has added fresh pressure to an already strained global market after disruptions caused by the US-Iran conflict, raising concerns over higher costs and potential supply risks for semiconductor manufacturers if the shortage persists.
Helium accounts for only a small fraction of a chipmaker's operating costs, but it is indispensable across multiple manufacturing stages. Industry experts say there is currently no practical substitute for the gas in several critical semiconductor processes, making it a single point of failure despite its relatively small share of overall production expenses.
The latest disruption follows military strikes earlier this year that damaged Qatar's Ras Laffan processing facilities, one of the world's largest helium hubs. While hopes of a supply recovery had emerged after a ceasefire, China's decision to halt helium exports has tightened an already constrained market.
An invisible but critical input
Silicon may be the foundation of semiconductors, but manufacturing advanced chips also depends on specialty chemicals and industrial gases. Helium is among the most critical because of its unique physical properties.
"Helium remains a strategically critical gas for semiconductor manufacturing due to its high thermal conductivity, chemical inertness, and ultra-low boiling point. It is essential for wafer backside cooling, leak detection, cryogenic systems, inert purging, and selection implantation and metrology processes," said Manish Rawat, semiconductor analyst at TechInsights.
While helium contributes only a small portion of fabrication costs, Rawat said it represents "a critical single-point dependency that can disrupt production if supplies are constrained."
The gas is used across the manufacturing of GPUs, AI accelerators, logic chips, DRAM, NAND flash, high-bandwidth memory (HBM), automotive chips, RF components and power semiconductors.
Its importance has only increased as chipmakers move to more advanced manufacturing nodes.
"Liquid helium gas of ultra-high purity is used across over 30 steps in leading-edge logic fabrication, 10-15 steps in DRAM fabrication, 20 steps in leading-edge HBM generations, 12-16 steps in 3D NAND fabrication and four steps in HDD disc productisation," said Danish Faruqui, CEO of Fab Economics.
According to Faruqui, helium consumption has risen dramatically as manufacturing processes have become more sophisticated.
"Across consumption of direct and indirect materials per wafer, helium consumption has grown 35-45x per wafer as the industry has moved towards advanced nodes, from 8-10 litres of liquid helium per wafer at 45nm to around 240 litres at 2nm and about 375 litres at 14A," he said.
That makes leading-edge AI chips among the most exposed to any prolonged supply disruption.
Why China's move matters
Global helium production remains highly concentrated.
"Before the conflict, the supply map was narrow and lopsided. The US sales of Grade-A and gaseous helium reached roughly 81 million cubic metres in 2025, while Qatar produced about 63 million cubic metres of a world total near 190 million. Two countries therefore supplied close to three quarters of the market, with Russia at 18 million cubic metres, Algeria at 11 million and Canada at six million, some distance behind," said Sanchit Vir Gogia, Chief Analyst and CEO at Greyhound Research.
South Korea, one of the world's largest semiconductor manufacturing hubs, sourced nearly 65% of its helium imports from Qatar, highlighting the industry's dependence on a handful of suppliers.
According to Gogia, attacks on Ras Laffan alone removed more than five million cubic metres of helium from global supply every month, tightening the market even before China's latest move.
China is not among the world's biggest helium producers, but it plays an important role in refining, distribution and supplying helium to semiconductor manufacturers across Asia.
Industry executives believe Beijing's export restrictions are intended to protect domestic supply rather than target overseas chipmakers directly.
"With China aggressively cordoning off its domestic reserves to protect its independent AI and domestic wafer fabs, it will now absorb an even larger share of undisrupted global supply lines, such as Russia's Amur GPP facility. This leaves less available volume for Western, South Korean and Taiwanese fabs on the open market, intensifying the global bidding war," Faruqui said.
Higher prices first, production risks later
The earliest impact is likely to be felt in helium prices rather than chip output.
According to Fab Economics, semiconductor-grade liquid helium sold for $15-$22 per litre under long-term contracts before the conflict. Prices have since climbed to $22-$35 per litre, with additional logistics and bunker fuel surcharges.
The spot market has tightened even more sharply. Helium that previously traded at $40-$55 per litre for buyers without long-term contracts now costs $85-$110 per litre or more.
For now, major semiconductor manufacturers remain protected by strategic inventories and recycling systems.
"Leading fabs typically maintain two to six weeks of usable helium inventory, while strategically important facilities may hold six to eight weeks, depending on storage capacity, recycling systems, supplier proximity and contract terms. Advanced fabs increasingly rely on helium recycling, significantly reducing fresh gas consumption," Rawat said.
He added that fabs with advanced recycling systems could continue operating for six to 10 weeks even if fresh supplies were interrupted, while facilities with limited recycling capabilities could begin facing constraints within two to four weeks.
However, analysts warn that a disruption lasting several months would force manufacturers to make difficult choices, including prioritising higher-margin AI chips, delaying non-essential maintenance and reducing production capacity.
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A gas that rarely attracts attention outside semiconductor factories is emerging as the industry's latest supply chain headache.
China's temporary ban on helium exports has added fresh pressure to an already strained global market after disruptions caused by the US-Iran conflict, raising concerns over higher costs and potential supply risks for semiconductor manufacturers if the shortage persists.
Helium accounts for only a small fraction of a chipmaker's operating costs, but it is indispensable across multiple manufacturing stages. Industry experts say there is currently no practical substitute for the gas in several critical semiconductor processes, making it a single point of failure despite its relatively small share of overall production expenses.
The latest disruption follows military strikes earlier this year that damaged Qatar's Ras Laffan processing facilities, one of the world's largest helium hubs. While hopes of a supply recovery had emerged after a ceasefire, China's decision to halt helium exports has tightened an already constrained market.
An invisible but critical input
Silicon may be the foundation of semiconductors, but manufacturing advanced chips also depends on specialty chemicals and industrial gases. Helium is among the most critical because of its unique physical properties.
"Helium remains a strategically critical gas for semiconductor manufacturing due to its high thermal conductivity, chemical inertness, and ultra-low boiling point. It is essential for wafer backside cooling, leak detection, cryogenic systems, inert purging, and selection implantation and metrology processes," said Manish Rawat, semiconductor analyst at TechInsights.
While helium contributes only a small portion of fabrication costs, Rawat said it represents "a critical single-point dependency that can disrupt production if supplies are constrained."
The gas is used across the manufacturing of GPUs, AI accelerators, logic chips, DRAM, NAND flash, high-bandwidth memory (HBM), automotive chips, RF components and power semiconductors.
Its importance has only increased as chipmakers move to more advanced manufacturing nodes.
"Liquid helium gas of ultra-high purity is used across over 30 steps in leading-edge logic fabrication, 10-15 steps in DRAM fabrication, 20 steps in leading-edge HBM generations, 12-16 steps in 3D NAND fabrication and four steps in HDD disc productisation," said Danish Faruqui, CEO of Fab Economics.
According to Faruqui, helium consumption has risen dramatically as manufacturing processes have become more sophisticated.
"Across consumption of direct and indirect materials per wafer, helium consumption has grown 35-45x per wafer as the industry has moved towards advanced nodes, from 8-10 litres of liquid helium per wafer at 45nm to around 240 litres at 2nm and about 375 litres at 14A," he said.
That makes leading-edge AI chips among the most exposed to any prolonged supply disruption.
Why China's move matters
Global helium production remains highly concentrated.
"Before the conflict, the supply map was narrow and lopsided. The US sales of Grade-A and gaseous helium reached roughly 81 million cubic metres in 2025, while Qatar produced about 63 million cubic metres of a world total near 190 million. Two countries therefore supplied close to three quarters of the market, with Russia at 18 million cubic metres, Algeria at 11 million and Canada at six million, some distance behind," said Sanchit Vir Gogia, Chief Analyst and CEO at Greyhound Research.
South Korea, one of the world's largest semiconductor manufacturing hubs, sourced nearly 65% of its helium imports from Qatar, highlighting the industry's dependence on a handful of suppliers.
According to Gogia, attacks on Ras Laffan alone removed more than five million cubic metres of helium from global supply every month, tightening the market even before China's latest move.
China is not among the world's biggest helium producers, but it plays an important role in refining, distribution and supplying helium to semiconductor manufacturers across Asia.
Industry executives believe Beijing's export restrictions are intended to protect domestic supply rather than target overseas chipmakers directly.
"With China aggressively cordoning off its domestic reserves to protect its independent AI and domestic wafer fabs, it will now absorb an even larger share of undisrupted global supply lines, such as Russia's Amur GPP facility. This leaves less available volume for Western, South Korean and Taiwanese fabs on the open market, intensifying the global bidding war," Faruqui said.
Higher prices first, production risks later
The earliest impact is likely to be felt in helium prices rather than chip output.
According to Fab Economics, semiconductor-grade liquid helium sold for $15-$22 per litre under long-term contracts before the conflict. Prices have since climbed to $22-$35 per litre, with additional logistics and bunker fuel surcharges.
The spot market has tightened even more sharply. Helium that previously traded at $40-$55 per litre for buyers without long-term contracts now costs $85-$110 per litre or more.
For now, major semiconductor manufacturers remain protected by strategic inventories and recycling systems.
"Leading fabs typically maintain two to six weeks of usable helium inventory, while strategically important facilities may hold six to eight weeks, depending on storage capacity, recycling systems, supplier proximity and contract terms. Advanced fabs increasingly rely on helium recycling, significantly reducing fresh gas consumption," Rawat said.
He added that fabs with advanced recycling systems could continue operating for six to 10 weeks even if fresh supplies were interrupted, while facilities with limited recycling capabilities could begin facing constraints within two to four weeks.
However, analysts warn that a disruption lasting several months would force manufacturers to make difficult choices, including prioritising higher-margin AI chips, delaying non-essential maintenance and reducing production capacity.
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