Semiconductor Electronic Specialty Gases

What electronic specialty gases are

Electronic specialty gases are the high-purity gases that make chips: they deposit films, etch patterns, dope silicon and clean chambers across the front-end process. Huate Gas defines them as the core branch of specialty gases, with high technical barriers and high added value, and the second largest front-end semiconductor material after the silicon wafer (2026 interim report, p. 13). A fab needs more than 50 gas varieties across its process steps, and purity is the whole game: ultra-pure grades run to 4.5N, 5N, 6N and even 7N, meaning 99.99999% pure, with metal impurities, moisture and particles controlled to parts per billion (Huate p. 15). A gas that fails purity does not just perform badly, it kills yield, so every product must pass a fab's certification before it earns a single order.

Where China stands

The gap is measured in varieties, not volume. According to the China Industrial Gas Industry Association, cited by Huate, China can produce fewer than 30% of the electronic specialty gas varieties used in integrated circuit production, with high-end capacity short and import dependence still high (Huate p. 14). The global market was over US$6bn in 2023 and is forecast by SEMI to grow 8.5% a year to 2028, with China growing 12%, the fastest region (Huate p. 14). At home, the specialty gas market grew from ¥17.5bn in 2017 to ¥49.6bn in 2023, an 18.96% annual rate (Jinhong Gas 2026 interim report, p. 16).

The foreign incumbents still hold the top end: Linde, Air Liquide, Nippon Sanso, Air Products and Merck, which bought Versum's electronic gas business, have long dominated high-end semiconductor gases (Huate p. 16). The two Chinese listed pure-plays attack from different angles. Huate Gas has the deeper catalogue: 57 electronic specialty gas products have achieved import substitution, more than 20 are used on 14nm and 7nm lines and some fluorocarbon and hydride products have entered 5nm processes, and its products serve over 90% of domestic 8-inch and 12-inch chip makers (Huate pp. 16, 24). Jinhong Gas has the bigger scale: the largest private gas supplier in China by sales, selling more than 100 gas varieties plus fab-wide gas management services, and deepening cooperation with SMIC, CXMT and SK Hynix (Jinhong pp. 23, 25). A third listed name, Nanda Optoelectronic, also lists electronic specialty gases as one of its three material lines, alongside precursors and photoresist, though its filing breaks out no gas revenue (2026 interim report, p. 12).

Economics: thin margins, long certification, a helium windfall

This is a volume-and-service business, not a high-margin one. Huate's gross margin was about 30.1% in the first half of 2026 and Jinhong's about 27.0% (our calculations from their income statements). Both are spending heavily to grow into the gap: Huate completed a 1,936.2 tonne per year electronic specialty gas project in August 2026, and Jinhong's new projects have started depreciating fast enough to cut its core net profit 73.5% in the half even as revenue grew 12.12% (Huate p. 25; Jinhong p. 12). Certification is the bottleneck that decides whether that capacity pays: a fab's approval takes 1 to 3 years, and a failed or delayed certification wastes the investment entirely (Huate p. 46).

The half's surprise profit driver was helium, not chip gases. Geopolitical disruption pushed helium prices up, and both companies rode it: Huate's helium and related revenue was about 20% of its total and grew 133%, while Jinhong's helium revenue grew 140.53% (Huate p. 24; Jinhong p. 26). That windfall is fragile. Huate says its helium supply depends on Russian export permits that must be applied for monthly, with uncertain outcomes (Huate p. 43). The chip-gas business underneath is steadier: both companies grew semiconductor revenue about 29% in the half, on new fab capacity coming online at home.

What to watch

Three things decide whether this node closes its gap. First, whether Huate's 5nm introductions turn into repeat volume at leading-edge fabs, rather than staying as sample qualifications. Second, whether Jinhong's new capacity fills fast enough to cover the depreciation that is currently eating its profit. Third, whether helium stays a windfall or reverts: if prices fall back, both companies lose the cushion that flattered this half's results.

Our view: electronic specialty gas is the least glamorous bottleneck in the chip chain and one of the most honest. The chemistry is not the hard part, qualification is, and the filings show both companies still earning their advanced-node credentials one fab at a time. Huate has the better technology story, Jinhong the better scale and service story, but the honest measure is the same for both: repeat orders at advanced fabs, not growth percentages off a helium-inflated base.