Iran war disrupts chip supply chain

Iran war disrupts helium, chip supply chain

The war in Iran is threatening a small but crucial part of the complex supply chain that helps produce the world’s chips, as the conflict limits access to much of the world’s helium.

© Ted Shaffey, Associated Press

Qatar produces about a third of the world’s helium, a gas that is central to the semiconductor manufacturing process at a moment when chips have become increasingly crucial as the lifeblood behind AI

But the war with Iran has disrupted Qatari natural gas production and the helium that is extracted alongside it, while also bringing a key shipping corridor to a halt through the Strait of Hormuz.

“You’ve got two problems — you’ve got the problem that you’re not getting output, and the second problem is that you’re getting an interruption in the logistics and the shipping,” said Simon Croom, a professor of supply chain management at the University of San Diego.

“That compounds because so many other products in the supply chain pass through the Middle East, whether it’s the Strait of Hormuz or the Suez Canal,” he added.

The conflict with Iran, which has now dragged on for more than three weeks, has proven particularly disruptive for energy markets.

Following the initial U.S.-Israeli strikes on Iran in late February, Tehran has responded by hitting targets throughout the Middle East, including gas and oil infrastructure.

It has also closed the Strait of Hormuz, the waterway that connects the Persian Gulf to the Indian Ocean and carries about a fifth of the world’s oil.

This has sent oil prices surging to more than $100 a barrel at times. But while much attention has focused on reverberations through the oil and gas markets, the same factors are also disrupting the supply of helium.

Helium is extracted alongside natural gas. Iranian strikes have targeted Qatari natural gas plants, with Reuters reporting that the country’s helium exports are poised to fall 14 percent following a recent series of attacks.

It also faces a bottleneck in the Strait of Hormuz, which has been effectively closed since early March, when Iran vowed to attack any vessels that attempted to travel through the corridor.

Helium is a “critical input” for semiconductor manufacturing, the Semiconductor Industry Association noted in a 2023 response to the U.S. Geological Survey about helium supply risk.

“Helium’s unique properties as an inert gas and a high thermal conductor make it ideal for use in functions that require preventing unwanted chemical reactions and ensuring control and precision of wafer temperatures,” it wrote at the time.

The gas can be used to help cool wafers during processes such as etching and deposition, in addition to cooling lithography light sources, explained Hanna Dohmen, a senior research analyst at Georgetown’s Center for Security and Emerging Technology.

Etching, deposition and photolithography are all various steps in the process of creating the intricate patterns that turn the wafers into chips. Helium can also be used for other purposes, such as detecting leaks.

Check out the full report at TheHill.com.

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Coinbase offers crypto-backed mortgages

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Coinbase is joining forces with the mortgage provider Better Homes & Finance to offer the first cryptocurrency-backed mortgages with the backing of Fannie Mae.

Prospective buyers will be able to use Bitcoin or USDC, a stablecoin managed by Circle, to fund their down payments.

“When qualifying for a home loan depends heavily on income history, credit profile, and cash savings, the system tends to favor those who have already accumulated capital. That dynamic reinforces wealth gaps across generations,” Coinbase said in a press release.

“At the same time, millions of Americans have built meaningful net worth in digital assets,” it added. “Until now, borrowers have not been able to get credit for those assets in the traditional mortgage underwriting process without first liquidating them.”

Under the system, buyers would receive two loans — a standard Fannie Mae mortgage on the home and a loan to fund the down payment that is secured by pledging crypto.

Fannie Mae and Freddie Mac were directed by Bill Pulte, the head of the Federal Housing Finance Agency, last year to consider accepting crypto as an asset when buying mortgages.

Crypto Corner is a daily feature focused on digital currency and its outlook in Washington.

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