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Policies and funding are gradually being put in place, accelerating the localization of specialty electronic gases.
Release time:
2022/05/30
As China intensifies its efforts to develop the semiconductor industry, newly added wafer production capacity will gradually come online. Coupled with the gradual implementation of relevant national industrial policies and financial support, demand for specialty electronic gases will continue to rise. According to forecasts by the Qianzhan Industry Research Institute, China’s market size for specialty electronic gases will reach 23 billion yuan in 2024, accounting for nearly 60% of the global market share.
As China intensifies its efforts to develop the semiconductor industry, new wafer production capacities are gradually coming online. Coupled with the gradual implementation of relevant national industrial policies and financial support, demand for specialty electronic gases will continue to rise. According to a forecast by the Qianzhan Industry Research Institute, China’s market size for specialty electronic gases will reach 23 billion yuan in 2024, accounting for nearly 60% of the global market share.
The lifeblood of the electronics industry—the domestic market continues to grow at a rapid pace.
Electronic specialty gases are often referred to as the "blood" of the modern electronics industry, with their primary applications spanning semiconductors, liquid crystal displays, crystalline silicon solar cells, optical fibers, and other fields. According to data from Linx Consulting, electronic specialty gases account for approximately 70% of the semiconductor market, while liquid crystal displays and crystalline silicon solar cells account for 20% and 4%, respectively. Among these, there are over 100 different types of electronic specialty gases used in the semiconductor industry, and they are extensively employed throughout all stages of the manufacturing process. According to SEMI data, the global market size for wafer fabrication materials in 2019 was about US$32.8 billion, of which electronic specialty gases accounted for roughly US$4.3 billion, representing a 13% share. This makes electronic specialty gases the second-largest consumable after silicon wafers, and the market is expected to reach nearly US$4.6 billion by 2021.
China is one of the world’s major markets for specialty electronic gases. In 2020, the market size reached 15 billion yuan, accounting for approximately 48% of the global share—a doubling from its 2011 level. From 2011 to 2020, China’s market growth rate (CAGR) significantly outpaced the global average. Unlike the global market, China enjoys technological and scale advantages in sectors such as display panels and photovoltaics, resulting in higher consumption of specialty electronic gases—these two sectors together account for roughly 50% of total demand. By contrast, the semiconductor market has developed relatively more slowly, with specialty electronic gases accounting for about 42% of its applications.
As China intensifies its efforts to develop the semiconductor industry and new wafer production capacities are gradually brought online, demand for specialty electronic gases will continue to rise. Coupled with growing demand from emerging industries such as display panels and photovoltaic energy, this will drive steady expansion of the domestic specialty electronic gas market. According to forecasts by the Qianzhan Industry Research Institute, China’s specialty electronic gas market is expected to reach 23 billion yuan in 2024, with its share increasing to nearly 60%.
Policies and funding are gradually falling into place, accelerating the localization of specialty electronic gases.
Due to the numerous barriers to entry in the specialty electronic gases industry, its level of industry concentration is relatively high. Currently, the world’s leading producers of specialty electronic gases include Air Liquide of France, Air Products & Chemicals of the U.S., Linde Praxair, Showa Denko of Japan, Daesung Industrial Gases of South Korea, SK of South Korea, Sumitomo of Japan, and United Microelectronics Corporation of Taiwan, China. In 2018, the global market share held by the top four players—Linde, Air Liquide, Air Products & Chemicals, and others—reached 94%, making these leading companies the primary suppliers. In the domestic Chinese market, foreign-invested enterprises account for as much as 85%.
The high degree of import dependence has made specialty electronic gases a significant bottleneck on China’s path to developing advanced technologies and new energy sources, and the issue of supply security for these gases urgently needs to be addressed. Since 2009, multiple government departments—including the National Development and Reform Commission, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology—have successively introduced a series of industry-related policies, clearly defining the new-materials nature of specialty gases and thereby strongly promoting the rapid development of this sector.
On the other hand, the second phase of the Big Fund, which has raised over 200 billion yuan in funding, is focusing its investments on equipment and materials, with a primary emphasis on semiconductor equipment and materials—areas where shortcomings are particularly evident. The fund’s investment strategy is centered on strengthening and perfecting key industrial chains within the semiconductor sector. As the second-largest consumable material in the semiconductor industry, specialty electronic gases are poised to accelerate their development under the support of the National Big Fund.
In the future, as domestic semiconductor manufacturers gradually ramp up their production capacity and are bolstered by relevant national industrial policies and financial support, Chinese specialty gas suppliers will increasingly demonstrate competitive advantages, continuously breaking through foreign technology monopolies. The localization of specialty gases is an inevitable trend in the industry’s future development. Currently, China has achieved technological breakthroughs in several product categories, among which nitrogen trifluoride, ultrapure ammonia, and germane are the sub-sectors with the fastest progress in replacing imported semiconductor materials.
The number of domestic companies entering the market is increasing, primarily consisting of three types of firms.
As domestic technology continues to mature, some specialty electronic gases have gradually become domestically produced, and the number of Chinese companies entering this market is on the rise. These companies can be broadly categorized into three types: First, gas companies such as Huater Gas and Jinhong Gas, whose core business is primarily industrial gases. These companies offer a wide variety of products with high purity levels. Second, semiconductor material platform companies like Yak Technology and Nanjing University Optoelectronics, which adopt a multi-dimensional business strategy. Yak Technology’s specialty gas segment accounts for 16% of its total revenue, while Nanjing University Optoelectronics’ specialty gas segment accounts for 72%. Yak Technology is the leading domestic enterprise in fluorine-containing gases, whereas Nanjing University Optoelectronics covers both fluorine- and hydrogen-containing gases. These companies focus on a limited number of specialty electronic gas categories and have extensive sales channels. Third, integrated companies such as Haohua Technology, which operate across multiple sectors and boast strong overall capabilities.
Walter Gas is a leading player in the localization of specialty gases. Currently, the company produces and sells over 230 types of specialty gases and more than 10 types of conventional gases, making it the company with the widest product range in the industry. Among these, the company’s four mixed lithography gases—Ar/F/Ne, Kr/Ne, Ar/Ne, and Kr/F/Ne—were certified by ASML, the world’s largest supplier of lithography equipment, in 2017. Walter Gas is the only gas company in China to have received this certification, and it is also one of only four companies globally whose four ASML products have all been certified. As the quality of its products continues to improve and its market development deepens, the company’s products have gained wide recognition from leading customers in downstream related industries and have achieved large-scale supply. Currently, the company has successfully achieved customer coverage of over 80% among domestic integrated circuit manufacturers producing wafers 8 inches and larger.
Debang Securities believes that as the production capacity of the 450 million yuan fundraising investment project is gradually released, the company’s product portfolio will be further expanded, enabling it to rapidly increase its market share and sustainably enhance its profitability.
Jinhong Gases is a leading domestic supplier of specialty gases and bulk gases. It was the first in China to break the technological monopoly on ultra-pure ammonia, and currently holds over 50% of the domestic market share. In addition, the company’s newly developed products—such as 9N-grade ethyl orthosilicate for electronic applications and 5N-grade hydrogen bromide for electronics—have already reached domestically and even internationally advanced technological levels. Relying on its strong technical capabilities and outstanding...
Thanks to its superior product quality and other advantages, the company has earned widespread recognition from numerous well-known clients in emerging industries. Currently, ultra-pure ammonia is being officially supplied to Shanghai Jita, while nitrous oxide and ammonia have respectively passed testing by SMIC and Wuxi SK Hynix. The company is also actively engaging with TSMC, Yangtze Memory Technologies, and Hefei Changxin to secure special gas supplies. According to Tianfeng Securities, as China's electronic semiconductor industry continues to develop rapidly, there is enormous potential for domestic production of key raw materials. As a result, the company’s specialty gases for electronics are poised for rapid growth, and their revenue share will continue to rise.
Kemite Gas is an industrial gas company that uses petrochemical tail gases as raw materials. In recent years, the company has continued to accelerate its development in the specialty gas sector. Currently, the company’s first-phase electronic specialty gas project was put into operation at the end of 2020. Its core products include high-purity rare gases (such as krypton, xenon, and carbon dioxide) as well as fluorine-based mixed gases, which are primarily used in fields like lasers and semiconductors. At the end of 2020, the company signed an exclusive agency agreement with Nanjing University Optoelectronics, covering semiconductor manufacturers in mainland China. From March to May 2021, the company successively signed krypton sales contracts with several electronic specialty gas distributors, with a total contract value reaching 9.52 million yuan. As a result, the company’s electronic specialty gas business has begun to scale up gradually.
Zhejiang Securities expects the company to achieve sales revenue of 30 million yuan for the full year, with krypton gas being its primary product and a gross profit margin ranging from 80% to 90%. Looking ahead, as the company’s customer certification process is expected to be largely completed by 2023 and the first-phase project operates on two shifts (24 hours a day), revenues from specialty electronic gases are projected to reach 250 million yuan, representing a year-on-year increase of 117%, with a gross profit margin of approximately 80%.
Author of this article: Yicai Investment Research. Compiled and published by Today Semiconductor. Please cite the source when reprinting; otherwise, it will be considered an infringement!
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