When it comes to the term electronic gas, some investors may feel unfamiliar: charged gas? Or have electrons turned into gas? Actually, none of them. Electronic gas is actually a general term for gases used in the semiconductor industry. According to their categories, they can be divided into three main types: pure gas, high-purity gas, and semiconductor special material gas.
However, in daily industry classification, electronic gases are more divided into electronic bulk gases and electronic specialty gases based on their usage. The former has a larger usage of a single variety and permeates various stages of semiconductor production. The latter has a smaller usage of a single variety and is generally used at a specific stage of production.
Highly consistent with the prosperity of the semiconductor industry
In the production process of microelectronics and optoelectronic devices, almost every step from chip growth to final device packaging cannot be separated from electronic gas. For example, chip etching requires fluorocarbon gas as the etching gas, and argon and helium gases are usually added during this process. Argon gas is used for physical etching, while helium gas has a smaller mass and is used as a diluent to dilute the etching gas concentration, making the etching effect more uniform. Therefore, electronic gas is also known as the "grain" and "source" of semiconductor materials. In the entire semiconductor industry, electronic gases account for the second highest proportion of consumable costs, second only to silicon wafers.
Due to the fact that the relevant gases are mainly used in the semiconductor industry, the prosperity of the electronic gas industry is highly consistent with the overall semiconductor industry. The following two charts reflect the market size of electronic gases in China in recent years. It can be seen that the growth trend is quite obvious, and the growth rate of the Chinese electronic gas market is even faster. In electronic bulk gases and electronic specialty gases, the latter has a significantly faster growth rate than the former.
According to the latest data from 2022, the trend of faster growth in domestic electronic specialty gases has been continued. According to data released by the research institution TECHCET, the global electronic specialty gas market size in 2022 was $5.001 billion, a year-on-year increase of 10.20%, reaching a historic high. It is expected that by 2025, the global electronic specialty gas market will reach a size of 6.023 billion US dollars, with an average annual growth rate of 6.39% from 2022 to 2025. The industry scale will continue to grow, and the future space is vast. From the perspective of the domestic electronic special gas market, according to data from the China Semiconductor Industry Association, the size of China's electronic special gas market in 2022 is 23.1 billion yuan, a year-on-year increase of 6.94%. In the future, as the global semiconductor industry chain continues to shift domestically, it will significantly boost China's demand for electronic specialty gases and further accelerate the localization process of electronic specialty gases.
Are there any investment opportunities in the industry?
Given the optimistic prospects of the electronic gas industry, are there any investment opportunities within the industry? In fact, there is a huge space for domestic substitution in the electronic gas industry, and some specialty gases still rely on imports. However, this also means that once a domestic enterprise successfully breaks through, it has the opportunity to quickly occupy this part of the market and achieve domestic substitution.
Several securities firms have also expressed their views on this segmented industry. Dongwu Securities released a research report stating that the upward trend of PMI index indicates that various industry support policies and measures to promote consumption and stabilize investment have shown positive effects. The domestic economy has strong recovery momentum, and the momentum of economic recovery continues to improve, further strengthening the confidence of market entities. With the acceleration of independent and controllable domestic substitution process, and the continued destocking characteristics of the semiconductor industry, the 23H2 semiconductor industry is expected to gradually recover, driving further recovery in industrial gas demand.
Dongwu Securities stated that there is an urgent need for domestic substitution in the electronic specialty gas industry to ensure the security of the semiconductor industry chain. China's special gas enterprises are accelerating the breakthrough of bottleneck problems and breaking the monopoly of foreign manufacturers. Key recommendation: Huate Gas is a leader in specialty gases, driving rapid growth through expanding product categories and expanding production capacity. Kaimete Gas is expected to expand its specialty gas category and accelerate breakthroughs in customer certification orders. The 90000 Nm3 rare gas extraction unit in Baling will be put into operation in Q2 2023, achieving self-sufficiency in rare gas raw materials. In addition, it is recommended to pay attention to: Zhongchuan Special Gas, Heyuan Gas, Silane Technology, Qiaoyuan Shares, Yak Technology, Zhengfan Technology, etc.
Ping An Securities released a research report stating that looking ahead to the future, inventory in industries such as terminal semiconductors and display panels is gradually decreasing, and fundamentals are expected to improve. The demand for specialty gases is also expected to gradually release; The trend of the semiconductor and high-end display panel industry chain gradually shifting to China is evident, with large-scale electronic special gas projects under construction by leading domestic special gas production enterprises, and the localization process continues to advance.
Ping An Securities suggests paying attention to the specialty gas sector. We are optimistic about the gradual reduction of inventory and recovery of demand in industries such as terminal semiconductors and display panels, which will drive the overall improvement of the industry chain's fundamentals. In terms of specialty gas, it is recommended to pay attention to top enterprises with high product barriers, import dependence characteristics, and continuously expanding production capacity, such as Jinhong Gas, Nanda Optoelectronics, and Huate Gas.