Electronic Specialty Gases for Semiconductor Materials: The 'Lifeblood' of Semiconductor Manufacturing

Sputtering metal film deposition: Sputter deposition refers to a process conducted inside a vacuum chamber, wherein charged particles bombard a target material’s surface, causing its atoms to gain sufficient kinetic energy to be ejected into the gas phase and subsequently deposited onto a substrate. Sputtering gases—primarily inert gases such as argon—are the principal raw materials used in this sputtering process. TFT dry etching process: Dry etching is mainly employed for patterning non-metallic thin films. Within the four photolithography steps, it is primarily used to etch silicon islands, channels, and contact holes. Common dry etching techniques include plasma etching (PE), reactive ion etching (RIE), and inductively coupled plasma etching (ICP). Different etchant gases are selected depending on the specific film type being etched. In recent years, global LCD panel production capacity has continuously shifted from Japan, South Korea, and Taiwan to mainland China. As new LCD production lines in South Korea and Taiwan slow down, domestic manufacturers—including BOE, HKC Group, and CSOT—have rapidly emerged. Driven by surging demand for TFT-LCD panels and strong policy support from central and local governments for the flat-panel display industry, numerous large-scale, high-generation TFT-LCD panel projects have been launched across China. Major domestic manufacturers continue rapid capacity expansion. Currently, LCD applications are increasingly trending toward larger sizes and higher resolution; large-size panels require cutting from high-generation production lines. Consequently, domestic players such as BOE, CSOT, and HKC Group are aggressively investing in high-generation lines—significantly increasing demand for electronic specialty gases. Part III: Introduction to International and Domestic Electronic Specialty Gas Manufacturers Globally and domestically, major Western and Japanese companies—including Air Products, Air Liquide, Taiyo Nippon Sanso, and Linde Group—dominate the majority of market share. In the domestic Chinese market, localization stands at less than 15%. However, domestic enterprises have achieved technological breakthroughs in high-purity arsine, phosphine, silane, fluorinated gases, and other specialty gases. Among approximately 50 types of electronic specialty gases, over half are now supplied by Chinese manufacturers. Thanks to clear cost advantages in production energy consumption and logistics—and rising strategic importance of semiconductor materials and equipment—the localization and substitution of electronic specialty gases is accelerating. Domestic manufacturers are expanding capacity aggressively, with notable improvements in financial performance. I. International Manufacturers 1. Air Products and Chemicals, Inc. (USA) Air Products and Chemicals, Inc. (NYSE: APD) delivers unique products, services, and solutions globally to customers across technology, energy, healthcare, and industrial manufacturing sectors. As the world’s only company producing both industrial gases and chemicals, it offers not only industrial, process, and specialty gases, but also related equipment, specialty chemicals, and chemical intermediates. In China, Air Products is among the largest industrial gas suppliers, providing a broad portfolio of high-quality electronic specialty gases to numerous local and multinational enterprises across diverse industries. 2. Air Liquide Group (France) Air Liquide Group is a global leader in industrial, medical, and environmental gases, operating in 75 countries. Air Liquide is listed on Euronext Paris (Class A) and is a constituent of both France’s CAC 40 Index and the Dow Jones STOXX Europe 50 Index.

A Golden-Track Industry—One Priceless Question Demands an Answer

Over the past few years, semiconductor chips have ranked among the hottest subsectors on China’s A-share market. Downstream segments—including chip fabrication, packaging & testing, and chip design—offer the largest total addressable market and thus naturally attract the most speculative attention. Upstream segments—such as semiconductor equipment and materials—though smaller in overall market size, still hold considerable investment value as indispensable ‘water carriers’ for the industry. Chip manufacturing requires an enormous variety of materials—and one category, though perhaps overlooked by the general public, is critically essential: industrial gases. This category is collectively known as electronic specialty gases (or ‘electronic special gases’). Beyond semiconductor integrated circuits, they are also widely used in two closely related downstream industries: LED lighting and photovoltaic solar power. According to SEMI data, electronic gases accounted for 12.9% of global semiconductor manufacturing materials sales in 2018—second only to silicon wafers, which held a 36.6% share. Virtually every securities research report labels electronic specialty gases as a ‘golden-track’ sector offering significant investment potential. Let us first examine the global industry leaders. Overseas giants—including Air Products (NYSE: APD), Air Liquide, Taiyo Nippon Sanso, Praxair (USA), and Linde Group (which merged with Praxair in 2018)—collectively command 94% of the global market. Air Products’ stock price has exhibited sustained long-term growth, with its current market capitalization standing at $60 billion. Its latest annual report shows revenue nearing $9 billion and net profit approaching $2 billion. Linde (NYSE: LIN) currently boasts a market cap of $120 billion. Seeing these figures, many investors wonder: Given that overseas giants command such high valuations, while A-share-listed electronic specialty gas companies are valued at only several billion RMB, could any of them potentially become multi-baggers—delivering returns of 10x, or even 100x? Yet, securities research reports often fail to reveal the industry’s fundamental nature. Their logical reasoning frequently contains serious flaws. Even deeply flawed domestic firms routinely receive ‘buy’ recommendations from analysts who simply extrapolate from Western peers’ valuations—hailing the next ‘10-bagger’ or ‘100-bagger’. Every industry possesses its own unique essence. Without grasping that essence, decisions made by corporate executives, senior management, and investors alike will inevitably suffer from the classic pitfall: ‘a miss is as good as a mile.’ Upon closer examination of the electronic specialty gases industry, one striking feature emerges: Electronic specialty gases constitute merely a subset of industrial gases. We may analogize industrial gases to a comprehensive university—and electronic specialty gases to a specialized vocational college. Electronic specialty gases represent the most advanced, high-precision segment within the broader industrial gases domain. In theory, the ‘vocational college’ should be more valuable than the ‘comprehensive university.’ But in reality—is that truly the case? This is the priceless question addressed in this article: Within the industrial gases industry, is it better to operate as a ‘comprehensive university’—i.e., a diversified industrial gas supplier—or as a ‘vocational college’—i.e., a focused electronic specialty gas specialist? First, let us analyze the disparity in market scale between the two models. What proportion of revenue and profit do industry giants—such as Air Products, Air Liquide, and Linde—derive specifically from electronic specialty gases? For instance, many securities reports cite Air Products as the world’s top electronic specialty gas company. Indeed, Air Products pioneered the electronic specialty gases industry.

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