Special Report on the Industrial Gases Industry: How Did Linde Transform from Equipment Manufacturing to Industrial Gases?

(Report issuer/authors: GF Securities, Dai Chuan, Fan Fangzhou) I. Tracing the Rise and Legacy of Multinational Industry Leaders Through Linde’s 140-Year History (A) Originating in Oxygen Equipment, Evolving into a Comprehensive Group Founded in 1879, Linde is currently the world’s largest industrial gas manufacturer and gas engineering provider. As one of the industry’s key technological innovation leaders, Linde pioneered air separation for gas production. After achieving success in refrigeration, mechanical engineering, materials handling, and other fields, the group ultimately chose industrial gases and gas engineering as its core development path. Pre-war expansion from refrigeration into adjacent sectors established Linde’s leadership through technological superiority. In 1879, founder Carl von Linde and five partners founded Linde Ice Machine Company in Germany with a registered capital of 200,000 marks. As commercial and domestic refrigerators gained popularity, refrigeration equipment remained one of Linde Company’s (distinct from Linde Group, formed in 2006) primary businesses. Through continuous R&D, Linde identified cryogenic gas liquefaction—a field with exceptionally high technical barriers—and thus established a long-term strategic focus on technology—not low cost—as its core competitive advantage. Customer demand from the refrigeration business sparked Linde’s exploration into gas liquefaction, leading to rapid technical breakthroughs. In the early 1900s, the brewing industry’s need for refrigeration fostered close collaboration between Linde and brewers. In 1890, Dublin Brewery ordered a carbon dioxide liquefaction unit from Linde, prompting Carl von Linde’s focused attention on gas liquefaction. During its first test in 1895, Linde’s team successfully produced several liters of liquefied air, prompting the establishment of a dedicated Gas Liquefaction Department in Munich. Because oxygen and nitrogen have similar boiling points, it was not until 1899 that Linde first achieved fractional distillation to produce oxygen-enriched air and introduced it into the chemical industry. The completion of Linde’s first nitrogen rectification column in 1905 revealed the enormous economic potential of gas liquefaction; the company immediately decided to monopolize the oxygen market, and within five years, all major German competitors sold their assets to Linde. By the 1920s, Linde had extended its process horizontally to other gases—mastering the cryogenic separation of hydrogen, nitrogen, methane, and ethylene from coke-oven gas—becoming a specialist in this domain. The company had essentially captured the global market, and the Gas Liquefaction Department had far surpassed the Refrigeration Machinery Department in importance. Wartime expansion via gas business, followed by postwar dismantling and liquidation. As wartime demand for explosives drove increased ammonia requirements, synthetic plants—needing nitrogen extraction and other technical gases—became key Linde customers. During WWII, Linde supplied industrial gases and maintenance tools for military vehicles to the armed forces; after a brief adjustment period, revenues surged rapidly, generating substantial profits. Concurrently, agricultural machinery markets flourished, prompting Linde to acquire Güldner in Aschaffenburg and enter diesel engines, agricultural tractors, and electric motors. However, over three-quarters of Linde’s equipment were destroyed during the war, and the company lost nearly all its overseas assets. Postwar stagnation due to outdated management philosophy, shifting toward balanced diversification. Rebuilding overseas subsidiaries consumed over two decades, leaving Linde significantly behind its U.S. peers and France’s Air Liquide.

Blaming AI Again? This Gas Soared 240%.

Argon is no cutting-edge, high-tech material. It is obtained via air separation and widely used in welding, steelmaking, and metal processing—fields seemingly worlds apart from 'AI' or 'semiconductors.' Yet this time, capital markets have begun grouping argon alongside tungsten hexafluoride, helium, and semiconductors for discussion. Argon’s Price Surge: AI Is Not to Blame Argon is primarily produced via low-temperature air fractionation—a byproduct of the air separation process. Unlike many chemical products, when market prices rise, producers cannot simply install standalone argon production units to boost output. New supply ultimately depends on air separation capacity, argon extraction capability, and downstream distribution infrastructure—resulting in inherently low short-term supply elasticity. This summer, scheduled maintenance at some air separation units, reduced operating loads caused by high temperatures, and regional supply volatility collectively tightened liquid argon supply on a temporary basis. According to a ZouChuang Information analysis published in August, concentrated maintenance shutdowns across multiple air separation facilities in central and eastern China—combined with reduced liquid output due to extreme heat—significantly widened the market supply gap. Yet what makes argon worthy of separate scrutiny lies in its dual identity. On one hand, it serves as a critical industrial gas for welding, steelmaking, and mechanical manufacturing—argon arc welding being its largest application, widely employed in structural steel, pressure vessels, shipbuilding, construction machinery, and aluminum components for new-energy vehicles. On the other hand, argon belongs to the category of bulk electronic gases, fulfilling protective and carrier-gas functions in semiconductor manufacturing. The semiconductor industry imposes far stricter requirements on argon purity, impurity control, and supply stability than ordinary industrial applications. It is not a 'magical semiconductor material,' but rather one of the most fundamental and ubiquitous gases in the semiconductor production ecosystem. Precisely because it is so foundational, its dynamics reflect the broader expansion of the entire industrial chain. AI has not directly driven this round of price hikes—but it is indeed lifting the long-term demand floor. Argon prices rose 240%, yet AI cannot be considered the direct catalyst. However, AI-driven chip fabrication capacity expansion is undeniably raising the long-term demand floor for electronic specialty gases. Two global industrial gas leaders have already committed real capital expenditures targeting semiconductor capacity growth. On July 31, 2026, Linde announced a long-term gas supply agreement with a major global semiconductor manufacturer, committing approximately USD 1 billion to expand its industrial gas facilities in Phoenix, Arizona, USA. The company plans to construct two new air separation units to supply ultra-high-purity nitrogen, oxygen, and argon to two newly built semiconductor wafer fabs. Linde stated this would represent one of its largest-ever investments globally for electronic-industry customers. If semiconductor capacity expansion were merely a capital-market narrative, Linde would have no reason to invest USD 1 billion building air separation units. In July 2026, industrial gas giant Air Products disclosed in its third-fiscal-quarter earnings materials that its subsidiary Sanfu Gases had signed a long-term agreement with a semiconductor manufacturer to support its capacity expansion. Under the agreement, Sanfu will design, build, own, and operate four large-scale advanced air separation units, bulk gas supply systems, and underground pipeline networks—supplying nitrogen, oxygen, argon, and helium. This confirms that semiconductor capacity expansion has translated into tangible capital expenditures by gas suppliers—not just conceptual speculation. Argon Is the Symptom—Supply-Demand Imbalance Is the Root Cause Broadening our view beyond argon to the entire electronic specialty gases sector reveals that argon is neither the first nor the last gas to experience supply-demand shifts.

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