Artificial Intelligence, Business, Digital Economy, Technology

The next casualty of the Iran War has arrived

GLOBAL DIGITAL ECONOMY

Intro: The Iran War has led to shortage of helium, vital for AI but also for many of Britain’s smaller businesses. If the Strait of Hormuz blockade continues, a chip shortage could well be on the cards

The world has lost 40pc of its helium supply since the start of the latest war in the Gulf, first from Qatar and then from Russia.

We will soon find out whether the global digital economy can shrug off losses of such a critical gas on this scale and whether our political leaders will allow the AI boom to keep gobbling up an ever-greater share.

Industry cannot make advanced AI chips or semiconductors below 10 nanometres without ultra-high purity helium to cool the wafers and stabilise the plasma for etching. Even workhorse chips for cars and computers require lower-grade helium at 99.999pc purity.

But we also need helium for other high priorities: in nuclear power, advanced weaponry, aerospace, fibre-optic cables, quantum computing, chromatography, or to cool superconducting magnets in MRI machines. There are no easy substitutes. Liquid helium is the coldest known substance on Earth, with a boiling point of -269°C. Hence, why everybody is scrambling around trying to scoop up whatever they can find in the world.

It cannot be synthesised artificially – it comes from the radioactive decay of thorium and uranium – and is hard to store. China has strategic stockpiles of everything but not for this one vital input.

Helium is a small cost for digital behemoths with the deepest pockets, relying on “fabs” or foundries that cost $20bn (£15bn) a shot. Wafer fabs are not going to close, so with supply shortages, the larger conglomerates will be prepared to pay more than anybody else.

Another insidious process is at work. The semiconductor industry is in effect hoarding its scarce supply for the most lucrative AI fabs while rationing helium for routine “mature-node” chips that play a far bigger role in the day-to-day economy.

Triaging has taken hold. The industry reserves what they have for AI accelerators, high-bandwidth memory, and advanced logic chips for data centres.

There is less left for chips in cars, laptops, and the consumer electronics that we all rely on. Everybody is talking about petrol prices but nobody is talking about helium.

The fear is that there could be a repeat of the chip shortage that shut down European car factories during the pandemic. A Covid lockdown at a plant in Malaysia caused crippling losses on the other side of the globe. If a semiconductor factory anywhere in the world says that it won’t be able to supply more chips, then implicitly, the car industry is going to have big problems in the third and fourth quarters.

Qatar normally supplies a third of the world’s helium, a by-product of natural gas production at its giant North Field. Not a single shipment has moved through the Strait of Hormuz since the war began.

Some 200 cryogenic containers are stranded in the Persian Gulf and are slowly heating up, causing gas to leak out through the pressure valves to avert a lethal explosion.

Vladimir Putin has compounded the shortage by imposing what amounts to a ban on helium exports outside the Eurasian Economic Union, purportedly to secure supply for Russia’s domestic economy and fibre-optic industry. This endangers another 9pc until the end of 2027.

For once, it is China that is taking the immediate brunt of the supply chain shock. It produces barely 15pc of its own helium needs. All the rest comes from Qatar and Russia.

America is sitting pretty in one sense. It is the world’s biggest helium producer with two-fifths of the market.

But that does not shield the US from the larger supply-chain consequences any more than US oil supremacy spares it from rising crude prices and mounting shortages of jet fuel and diesel, leaving aside fertilisers, sulphur, and aluminium.

The US subcontracts most of its chip production to Asia. Its share of global semiconductor output has collapsed to 10pc from 37pc in the 1990s. It will be years before the US chips act and manufacturing rearmament turn this around.

More than 75pc of the world’s semiconductors are made in the Far East. Nvidia either makes or finishes all of its most advanced Blackwell chips at TSMC plants in Taiwan, while Samsung makes high-bandwidth AI chips for Google in South Korea. Both countries normally rely on Qatar for two-thirds of their helium.

Large volumes of workhorse chips for just about everything else are made in Vietnam, Malaysia and Thailand, often at arms-length operations for China.

Analysts say the world had plenty of helium before the war broke out and can probably cover half the loss from Qatar at a pinch.

The industry has an informal system for allocating scarce supply to the most critical needs. The top of the food chain are MRI machines, chip manufacturing, aerospace, and nuclear power. At the bottom end are things like welding. There is no doubt that some people are going to get badly hurt.

One thing we should have learnt from Covid is that once the world’s just-in-time (J-I-T) supply chain goes into convulsions, with ships scattered to the four winds and stuck in the wrong place, the effects can be drastic, long-lasting, and out of all proportion to the nominal value of the goods.

If the war drags on for a few more weeks – as it may do so since both Donald Trump and Iran’s Revolutionary Guards think they are winning – there are only two solutions. Either the market destroys demand in its own ruthless way or governments step in with emergency measures and make hard choices, something that Britain seems incapable of under Sir Keir Starmer.

For aviation fuel, diesel, or naphtha, it may mean a taste of wartime rationing. For helium, it may soon be a question of whether liberal democracies allow billionaire tech giants to outbid everybody and hoard scarce gas for unpopular AI expansion.

Do politicians finally face down the hyper-scalers and redirect helium supplies to the urgent priorities of military and energy rearmament, as well as to sustain routine sectors that employ infinitely more people?

Just days ago, Marco Rubio, the US secretary of state, more or less, admitted that Iran’s regime now has enormous power to do harm and that Washington has no coherent plan to restore the status quo ante, let alone to reach a better outcome that vindicates the war. “The Strait of Hormuz is basically an economic nuclear weapon that they’re trying to use against the world,” he said.

But what is to be done about it?

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Arts, Britain, History, Politics, United States

The parallels with the 1760s

POLITICAL HISTORY

Intro: In the chaotic 1760s, as now, the country faced the entwined issues of debt and a geopolitical crisis

As America marks the 250th anniversary of their Declaration of Independence in 1776, we should hope they will remember the seven men who made it happen. I am not thinking of the Founding Fathers. No, I’m more reflective of the seven individuals or politicians who served as prime minister of Great Britain during the 1760s, the last of whom, the lachrymose Lord North, limped on until 1782 and oversaw events of the American War of Independence.

The 1760s are the last time that Britain had seven different prime ministers in a 10-year span, which is where we will be if the Labour Party dispenses with Sir Keir Starmer.

There are some important lessons from that time. In 1760, as students of history will recall, we (the Americans included) had a new King – George III, who came to the throne with the Earl of Bute, his former tutor, as very much the power behind the throne.

The prime minister of the day, the Duke of Newcastle, a veteran Whig statesman, had overseen the successful prosecution of the Seven Years War against France and Spain (resulting in British dominion over North America and much of India), but in 1762 he threw in the towel and his legacy was confined to the history books.

Lord Bute – who was also the King’s mother’s lover – then became prime minister. His tenure was an unmitigated disaster and was replaced in under a year by Lord Grenville, another Whig who lasted just two years but not before stoking up the North American colonies with his Stamp Act.

Grenville was replaced by the Marquess of Rockingham – best known now for commissioning Stubbs to paint his horse, Whistlejacket – in 1765. Rockingham’s administration expired with the Duke of Cumberland after just 13 months having attempted to conciliate the American colonies.

Pitt the Elder – “the Great Commoner” and the Churchill of his era – was the fifth PM of the decade. He held office for two years before resigning on grounds of health in 1768. By that time, though, his chancellor had passed the detested and draconian Townshend Acts, which included the imposition of taxes on imported glass, lead, and tea in America.

Running low on options, the King called on the Duke of Grafton and he lasted a year and 107 days before resigning in 1770 over France’s annexation of Corsica. Lord Noth came next.

George III bore some responsibility for this sustained imbroglio because of his inability to appoint someone who could command both his trust and the support of the Commons. But that’s only part of the story: underlying the crises was the burden of sky-high national debt, rising to a then lofty £144m.

It is to this we should pay special attention. Britain had emerged from the Seven Years War as the leading world power, with a vastly enlarged empire, particularly in America (having absorbed “New France”) that was expensive to maintain. Or, in other words, the trials of 250 years ago have some parallels with today: we’re also living with a massive national debt left over from the 2008 financial crisis and Covid-19 and confronting significant geopolitical challenges. Now, as then, it’s this combination of the two that is undermining the ability of the political class to rise to the challenges in hand.

Our level of debt stands at an extraordinary £111bn a year. If we could get that sorted – before it’s too late – we could, for instance, invest in more hard power and begin to claw back influence on global affairs again, rather than behaving like a geopolitical lobby group that no one takes any notice of.

As it was, the cackhanded efforts to balance the books and manage the enlarged empire in the 1760s and 1770s ended up driving a wedge between England and the formerly loyal American colonists. That led to another expensive war and the disastrous loss of what Churchill called the First British Empire.

Be grateful that in this case history cannot repeat itself.

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Biotechnology, Health, Medical, Pharmaceutical industry, Science

Big pharma failing to address our greatest medical threat

GLOBAL HEALTH SECURITY

Intro: Drug-resistant infections now kill more people every year than HIV or malaria, yet only six companies remain active in antibiotic research

Writing in the last few days, Professor Lord Darzi, FRS, said that big pharma is failing to tackle our greatest medical threat.

The world-renowned and eminent surgeon says that every caesarean section, joint replacement, and round of chemotherapy depends on antibiotics. In medicine as in war, a successful attack needs a solid defence. Antibiotics are not medicine’s glamourous front line – they are its foundations. And those foundations are crumbling.

Citing that drug-resistant infections now kill 1.27 million people every year, by 2050 the toll could reach eight million. The current mortality rate is more than HIV or malaria. The World Health Organisation (WHO) has warned that one in six bacterial infections is already resistant to standard treatment.

Yet this growing threat has been neglected by the very industry that has the capacity and resources to confront it. The major pharmaceutical companies walked away from antibiotics when they stopped generating lucrative returns. In the 1980s there were 18 companies involved in antibiotic research. By 2020 the number had fallen to six. The rest have pivoted to focus on expensive but highly remunerative medicines to beat cancer and long-term conditions such as obesity.

The ways in which these new medicines attack disease is indeed transformative, but they do not save lives all by themselves. Patients undergoing treatment are at higher risk of infection, but without effective antibiotics, the surgeon cannot operate safely, the oncologist cannot deliver chemotherapy, and the transplant physician cannot suppress rejection.

It is strategically incoherent to innovate relentlessly in attack while underinvesting in defence. The defensive arsenal is not optional infrastructure. It is foundational.

Between 2011 and 2020, US venture capital invested just $1.6bn in antimicrobials, compared with $26.5bn in oncology. The antimicrobial pipeline has declined by 35 per cent since 2021, from 92 to 60 projects, according to the 2026 AMR Benchmark report by the Access to Medicine Foundation, last month. Half are led by GlaxoSmithKline (GSK), which is carrying a disproportionate share of the large-company burden.

There are now only 3,000 active antimicrobial resistance (AMR) researchers worldwide, against 46,000 in oncology. When antibiotic programmes close, 90 per cent of researchers leave the field entirely. The talent and expertise needed for these medicines is collapsing alongside the drug pipeline.

This weakness puts at risk the pharmaceutical industry’s own growth. In 2024, global oncology revenues exceeded $200bn and R&D investment surpassed $40bn. Yet one-third of cancer patients develop bacterial infections during treatment, and up to half of these are now resistant – causing delays, dose changes, and poorer outcomes.

Developing new antibiotics is especially challenging. Most drugs succeed commercially by reaching as many eligible patients as possible. But for antibiotics, good stewardship means reserving novel agents for resistant infections – precisely the behaviour that collapses commercial returns.

In 2020, a consortium of more than 20 major pharmaceutical companies committed around $1bn to bridge the “valley of death” between discovery and profitability by creating the AMR Action Fund. The fund’s ambition was to deliver two to four new antibiotics by 2030. To date, it has delivered one – pivmecillinam, for urinary tract infections.

Bold initiatives such as this $1bn scheme look impressive. But there is a danger of their becoming “guilt capital” – spending that looks responsible but does not change the underlying economics. Without genuine pull incentives, and without adequate investment in diagnostics, stewardship, and surveillance alongside drugs, the spending risks being perceived as reputational insurance rather than strategic investment.

Most tellingly, the fund itself acknowledges it “struggled to find investment opportunities in clinical development exactly because the pipeline is insufficient”. When a $1bn fund cannot find enough assets worth backing, the problem is not capital. It is upstream failure to generate candidates and downstream failure to create a market that rewards success.

The conclusion is quite simple. We need a new approach.

First, build a sustainable pipeline through modern discovery – including AI-enabled research that must prove itself with real-world data – and implement payment models that reward access rather than volume. The UK’s subscription-style scheme is now being expanded. Similar approaches in other countries could create a viable global market.

Second, reduce misuse through transformative diagnostics. Rapid pathogen identification and resistance profiling at point-of-care would cut inappropriate prescribing – the single largest driver of resistance – and protect new drugs from the fate of their predecessors. A deadline should be called: no antibiotic prescription without a diagnosis by 2030.

Third, strengthen stewardship, surveillance, and access so that new antibiotics are protected, monitored, and reach patients appropriately anywhere in the world – particularly in low-income and middle-income countries where the burden of resistance is heaviest.

In 2028, we will mark the centenary of Alexander Fleming’s discovery of penicillin at St Mary’s Hospital in London – a moment that launched the antibiotic era and transformed human health. The centenary should be a moment of celebration. It risks becoming a memorial if action is not taken.

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