The Chip Insider®– The Iran War’s Helium disconnect: Impactful or nothing burger?

Summary: The Iran War’s Helium disconnect: Impactful or nothing burger?

As you know, one of the big problems for the semiconductor industry emerging out of the Iran War is the inability to get Helium through the Strait of Hormuz… The strategic question is, how impactful is Qatar’s helium disconnection from the world likely to be on semiconductor sales this year?

If the past is any guide, it’s most likely a nothing burger for semiconductor sales. The key reason is that semiconductor supply chain managers are the best in the world and have always acted rapidly to resolve issues with little impact on sales. Don’t be thinking all supply chain managers are the same, while pointing to the automotive supply chain managers, who were caught quite badly in 2021, with auto assembly plant shutdowns for lack of chips and roughly five years earlier for lack of capacitors. It was Little League level performance. Semiconductor supply chain managers in the major leagues. Let me show you just how professional they are. We've had nine major disasters in semiconductor history, one of which took out half the world's packaging material capacity. Was there ever a sales collapse? No! Far from it.

On average, across all 9 and twelve months after the disaster, the difference in IC sales were less than a percent higher than their 5-year CMA … In the month after they were 0% higher. Two months after, they were >1% higher. So instead of sales going down, quite counterintuitively, they went up. The compound increase for each month’s average for the twelve months was 9% higher than the 5-year CMA… That’s not all that’s counterintuitive: ASPs and Unit shipments also rose together. So what’s going on here? It’s classic availability bias… What’s happening behind the scenes… This is also how excess chip inventory gets built up, because in extreme shortages… But if there is one thing to believe, it’s that semiconductor supply chain managers are the best at ensuring supply...

Looking at ASPs, across all 9 and twelve months after the disaster, the difference in IC Average Selling Prices were, on average, 1% higher … As the Law of Supply and Demand dictates: any supply constraint will drive prices up… As for units, they were half-a-percent higher than their 5-year Centered Moving Average… To be fair, the individual month’s variations could be pure noise. The standard deviation … But if it’s just noise, the conclusion is the same: semiconductor supply chain managers have systematically ensured there was in fact no real shortage in past disasters.

“Intelligence is quickness in seeing things as they are”
— George Santayana