China announced on Friday a temporary ban on helium exports, effective immediately, as renewed military conflict in the Middle East threatens to trigger fresh shortages of the gas, which is critical for semiconductor manufacturing.
Background and Impact
Earlier this year, the US-Israeli war on Iran caused helium shortages, disrupting companies worldwide, including in China, where the artificial intelligence industry increasingly relies on domestically produced chips to train and run AI models. Helium is essential for heat management during semiconductor production.
The export ban is the latest example of Beijing seeking to prevent domestic shortages of critical materials by restricting overseas shipments. China has previously imposed similar export curbs on fuel, fertilisers and sulphuric acid. China is also seeking to expand domestic semiconductor manufacturing capacity and reduce the industry's reliance on advanced Nvidia chips that are subject to US export controls.
China's Helium Re-export Role
China remains heavily dependent on imported helium despite efforts to increase domestic production. However, the export ban could further tighten global supplies because Chinese companies have increasingly acted as intermediaries, importing Russian helium and re-exporting part of those volumes to overseas markets, including Europe. Analysts estimate that China imports around 85% or more of its helium needs.
Qatar accounts for a significant share of global helium production and has supplied more than half of China's helium imports in recent years. Helium is extracted from natural gas fields with unusually high helium concentrations and cannot be rapidly produced through other industrial processes.
Helium in Semiconductor Manufacturing
In semiconductor manufacturing, helium is used for wafer cooling, plasma etching, chemical vapour deposition, atomic layer deposition, lithography support and leak detection. The export ban could exacerbate global supply constraints, especially as AI chip production scales up.
