China Temporarily Bans Export of Chip Raw Materials Amid Escalating US-Iran Tensions
China announced a temporary ban on the export of helium, a raw material used in chip manufacturing, on Friday, as military conflict in the Middle East reignites. The renewed US-Iran conflict, following the end of a ceasefire, is viewed by China as a threat that could trigger new shortages of the gas vital for chip production. Earlier this year, US-Israeli strikes on Iran caused a helium shortage, disrupting American companies worldwide, including in China. The AI industry is increasingly dependent on domestic chips to train and run AI models, and helium is essential for thermal management in semiconductor production.
"The helium export ban is a tangible effort to protect domestic supply after the Iran conflict flared up again," said Cory Combs, head of supply chain and critical minerals research at policy research firm Trivium China. "The good news is I am not aware of any country that is heavily reliant on helium imports from China. The export ban may have a small-scale impact, but should not cause major shortages or price shocks," he stressed.
China is heavily dependent on helium imports, with Trivium estimating they cover about 85% of its needs. Qatar, which has supplied more than half of China’s helium imports in recent years and accounts for a third of global supply, experienced export disruptions due to the earlier Iranian attacks, Combs said. The helium ban is the latest example of Beijing’s efforts to prevent domestic shortages of critical materials by restricting exports, having implemented similar measures on fuels, fertilisers, and sulphuric acid.
According to Combs, Chinese companies typically export some helium by selling excess volumes to other Asian markets. With the Middle East conflict reigniting and raising regional supply and price risks, Beijing is seeking to prevent domestic firms from exporting for profit and exacerbating domestic price spikes. Helium is extracted from natural gas fields with exceptionally high helium concentrations and cannot be rapidly produced through other industrial processes. In chip manufacturing, the technology is used for wafer cooling, plasma etching, chemical vapour deposition, atomic layer deposition, lithography support, and leak detection.