The Iran war is putting a strain on the semiconductor industry’s supply chains. Why the helium shortage is now becoming a new risk factor for chip stocks.
• Helium prices have more than doubled in some cases on the spot market
• Chip and semiconductor stocks such as Samsung, SK hynix and TSMC affected by shortage
• In addition to chip values, investors should also monitor possible beneficiaries of the shortage
The scarcity of resources caused by the Iran war is further affecting the global economy. While the much-cited price of oil in particular is causing long faces in the industry, another good is slowing down production in the chip industry.
Helium supply fell by a third
Helium doesn’t usually make headlines. But the military conflict in the Middle East is making the noble gas a burden on the semiconductor industry. According to Barron’s, around a third of global supply has been lost due to the fighting. Qatar, one of the most important suppliers of the gas, is particularly affected, where disruptions to central plants are affecting exports.
A look at Japan shows how severely the shortage is already affecting the industry. According to a report by Bloomberg, Japanese helium imports from Qatar collapsed by over 80 percent to around 8,800 kilograms in March. Additionally, the spot price, which is usually around $500 per thousand cubic feet, has increased to around $1,000 to $1,200, Barron’s said.
Why the semiconductor industry is suffering from a shortage
For chipmakers, helium is a difficult commodity to replace. The gas is used in production to ensure stable temperatures when processing silicon wafers. This means that the bottleneck does not affect just any secondary area, but rather a central part of global semiconductor production.
According to Barron’s, Samsung Electronics and SK hynix are particularly in focus because South Korean chip companies have so far sourced a large portion of their helium from Qatar. The same applies to TSMC. For the corporations, it is not just about higher purchasing prices, but also about securing ongoing production processes.
There is apparently no threat of an acute production stop yet: TSMC is said to have stocks for around six months, Samsung and SK hynix, according to Reuters, have stocks for around four to six months.
Investors can deduce this from the helium shortage
For chip stocks, the current shortage is primarily an additional risk factor. Citing industry association SEMI, Reuters reports that global semiconductor sales could rise to $1 trillion this year. SEMI chief Ajit Manocha told the news agency: “This year is probably assured.”
Nevertheless, the market is likely to pay closer attention to inventories, delivery contracts and margins in the future for stocks such as Samsung, SK hynix and TSMC. The longer the disruption to the supply chain lasts, the more a cost problem can become a production risk.
Investors could therefore also take a look at possible beneficiaries of the shortage. ExxonMobil, for example, produces about 20 percent of the world’s available helium and is expected to benefit from the shortage. According to Barron’s, Air Liquide, Air Products & Chemicals and Linde are also likely to be examined.
Benedict Kurschat, editorial team at finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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