Why Semiconductor Growth Will Drive Helium Demand

The global semiconductor industry is undergoing an evolution as nations worldwide seek to strengthen their domestic chip production capabilities. 

This shift, catalysed by recent geopolitical tensions and supply chain vulnerabilities exposed during the COVID-19 pandemic, has led to significant policy initiatives such as the US Chips Act and the EU Chips Act.

These programmes aim to reduce dependence on foreign chip manufacturers and bolster national technological sovereignty.

However, this push for domestic semiconductor production is poised to have far-reaching consequences, particularly in the realm of helium supply and demand.

Helium, a critical element in semiconductor manufacturing, is at the centre of this transformation.

Its unique properties make it indispensable in chip production processes, particularly in cooling applications where no viable alternatives exist.

This means that as countries ramp up their domestic chip manufacturing capabilities, the demand for helium is expected to surge, raising concerns about the sustainability of supply chains and the potential for market volatility.

Helium demand set to soar

According to a recent report by IDTechEx, a technology market research firm, helium demand for semiconductor manufacturing is projected to increase more than five-fold globally by 2035.

In the US alone, demand is expected to quadruple over the next decade.

Dr Shababa Selim, a Technology Analyst at IDTechEx, a technology market research company, explains the critical role of helium in semiconductor production: "Helium's exceptionally high thermal conductivity and chemically inert nature allow for the fast cooling of chips during production".

This property becomes increasingly crucial as semiconductor technologies advance towards smaller nodes, requiring more effective thermal management during manufacturing processes.

The surge in demand is being driven by several factors, including the growth of AI, quantum computing, 5G telecommunications and electric vehicles.

These technologies require advanced semiconductor nodes, which in turn necessitate more helium in their production processes.

Investment and onshoring initiatives

The US Chips Act, signed into law two years ago, has already allocated over US$30bn of its US$39bn in direct incentives for onshore chip manufacturing.

This has spurred significant investment in the sector, with companies like Intel planning to invest over US$100bn over five years to expand its chip-making capacity across several US states.

Similarly, Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, is constructing three fabrication plants in Arizona.

The first of these is expected to begin production of 4nm process technology (a technique that produces smaller transistors, enhancing performance and energy efficiency) in the first half of 2025.

These investments are part of a broader trend of onshoring semiconductor production, with over US$395bn in announced investments from multiple companies in semiconductors and electronics expected in the US over the next decade.

Supply chain challenges

While these investments are set to boost domestic semiconductor production, they also raise concerns about the strain on existing supply chains, particularly for helium.

Helium is a finite resource that has historically faced chronic supply challenges and market volatility.

IDTechEx warns that although helium production capacity is expected to increase, with Qatar and Russia planning to ramp up production, geopolitical tensions in helium-producing regions could disrupt supply.

This uncertainty underscores the need for robust and diversified supply chains to support the growing semiconductor industry.

To address these challenges, the semiconductor industry may need to invest in helium management solutions, including recycling and reclamation technologies.

These measures could help future-proof the industry's growth and ensure a more sustainable approach to helium usage.

"The semiconductor industry will increasingly need to consider helium management solutions such as helium recycling and reclamation technologies to future-proof the industry's sustainable growth," Dr Shababa concludes.

As the global semiconductor industry continues to evolve, balancing the demand for advanced chip technologies with the sustainable use of critical resources like helium will be crucial.

The success of onshoring initiatives and the long-term viability of domestic semiconductor production may well hinge on the industry's ability to innovate in resource management and supply chain resilience.

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