The global economy has become so tightly interwoven that no country should expect to become completely self-sufficient. Rather than making efforts to decouple our economies, we need to accept that, given the complexity of modern technology, interdependence may be the only viable path forward.

This is a link-enhanced version of an article that first appeared in the Mint. You can read the original here. For the full archive of my Ex Machina articles, please visit my website.

Even though the Strait of Hormuz is just about 33km wide at its narrowest point, about 20 million barrels of crude oil and refinery products would pass through it every day before the war in West Asia. This was roughly a quarter of all seaborne oil trade. Since late February, tanker traffic through the strait has fallen sharply, driving up the price of Brent crude and triggering an oil shock. But while our attention has been focused on oil, there are other consequences—equally, if not more significant—that could threaten the global economy in far more dangerous ways.

Amid the freight sitting idle in the Gulf are 200 containers of liquid helium waiting for Iran's permission to pass through the strait. These containers were chilled to near absolute zero when loaded, but have been slowly warming up with every day's delay. If they are not allowed to pass within the next 40 days, the liquid helium will eventually revert to gas and be vented into the atmosphere, where it will be lost forever.

Helium is produced as a byproduct of processing natural gas into its liquefied form, LNG. Qatar accounts for roughly a third of the world's commercial helium output. When QatarEnergy halted production after Iran attacked its Ras Laffan refinery on 2 March, helium output ceased. This leaves us staring at a global helium shortage both in the short and medium term.

Chipmakers in the semiconductor industry use liquid helium to cool silicon wafers during the plasma etching process. South Korea, home to Samsung and SK Hynix, sources 65% of its helium from Qatar, while Taiwan sources 69%. SK Hynix produces 62% of the world's high-bandwidth memory (HBM) units contained in every Nvidia H100 and B200 GPU. Without HBM units, GPUs cannot be made. Without SK Hynix, HBM units run scarce.

The Hormuz squeeze has not just affected the global energy trade, but several other elements of the deep, multilayered supply chains that hold the world together. While our immediate focus is on energy, the current conflict is a stark reminder of just how tightly interlinked the global economy is.

Our instinctive response to such crises has always been to reshore, decouple and diversify, but we are constantly forced to come to terms with the reality of a highly inter-dependent global production stack. We may have reached the point where self-sufficiency is no longer an option and we have no choice but to live with disruptions.

Beyond the current crisis, the semiconductor industry's supply chain dependencies run far deeper than helium. TSMC in Taiwan manufactures 92% of the world's most advanced chips, the processors that power every AI model, data centre and smartphone in the world. But TSMC cannot make its chips without highly specialised machines from ASML, a Dutch firm in Veldhoven that has a de facto monopoly over extreme ultraviolet (EUV) lithography, a sophisticated technology essential for making sub-5nm chips. Despite decades of effort and tens of billions of dollars, China remains, by most estimates, at least a decade away from replicating this technological capability.

At the heart of ASML's machines are specialised optics made by Carl Zeiss, a German firm whose semiconductor division is the sole supplier of the mirrors that are essential to every EUV system. These mirrors must be polished to within a single atom's thickness, a level of precision that took 25 years and billions of euros to perfect. This means that the manufacture of 80% of all chips worldwide depends on the optical products made by a single company in Europe.

Which brings us to the strangest dependency of all. In addition to chips, South Korea is also a significant shipbuilding nation. Korean shipyards like HD Hyundai, Samsung Heavy and Hanwha Ocean have built over 80% of the world's LNG carriers over the past five years. This creates a striking paradox: one of the countries that is most dependent on Gulf energy is also the one the world depends on to build the ships it needs to transport hydrocarbons. If the Korean industry slows, the global capacity to reroute energy supply would slow with it, further deepening the crisis.

Over the past few years, our instinctive response to crises like this has been to localise production. Around the world, countries have invested in domestic semiconductor-making capabilities and rare-earth extraction facilities to offset the impact of conflicts they have had to deal with in recent years. But there are limits to that approach. You cannot compress 30 years of accumulated manufacturing intelligence into a policy cycle. Even after decades of effort, tens of billions of dollars in investment and a concerted engineering push, China cannot build the machines it needs to make sub-5nm chips. That is knowledge that cannot be bought or learned without iteration.

We could view the Hormuz crisis as evidence that our experiment with globalisation has failed. That, however, would be a mistake. If anything, it should remind us that we chose, rationally and repeatedly, to allow different parts of the world to do what they do best so that the global economy could prosper.

Interdependence is not an option. It is the condition under which much of the modern world operates. The real risk is not that we have come to depend too much on one another, but that conflicts like these will sever connections we can no longer afford to break.