Industrial gas sector charged up on India's semiconductor industry boom

Now, the component industry is seeking government assistance with technology transfer, land allotment, electricity, and capital subsidy, since many new gases will need to be manufactured in India

India’s semiconductor industry had a size of around $27 billion in 2022, with almost all the requirements met through imports.

With the government’s push for domestic manufacturing, the sector is likely to see fresh investments over the next few years.

With players like Foxconn, Micron and Vedanta planning to move aggressively on their semiconductor plans, India’s industrial gas sector, too, is upbeat.

This is because high purity gases represent the biggest material expenditure after silicon for a typical fab unit.

The components industry is now seeking government help for technology transfer, land allotment and electricity and capital subsidy, as a lot of new gases will have to be manufactured in India. And, this requires upfront capital investment.

Industry experts said that if there is a semiconductor boom, Indian manufacturers are ready to supply the most commonly used bulk gases in semiconductor manufacturing. These include nitrogen, helium, hydrogen and argon, in addition to specialty and electronic gases that need to be imported.

The companies with significant presence in the industrial gas segment include Inox Air Products, Linde India, Air Liquide India, Praxair India and Taiyo Nippon Sanso K-Air India, among others.

According to experts, all the industry players are seeing the semiconductor sector as a major sunrise industry.  

“If solar cells and mobile phones need about five-seven different kinds of gases, semiconductors need 50 types of gases,” said Siddharth Jain, managing director (MD) and promoter, Inox Air Products.

Jain added that as soon as the investment cycle in semiconductors begins, the industry will have to supply several new gases. Majority of these gases are not produced in India and need government support.  

At present, the metals segment, including steel, stainless steel and others, consumes around 40-50 per cent of the demand for industry gases.

And, around 10 per cent is in the case of the health care segment while the remaining is split between various other industries.

“We are extremely happy as an industrial gas company. Our largest customers were the steel industry, metal fabrication, health care, oil and gas. All of a sudden, we have this new sunrise sector of electronics and semiconductors. This is super exciting,” Jain said.

In addition to the major gases, a host of other gases such as ammonia, disilane, germane, carbon dioxide, nitrous oxide, nitrogen trifluoride, hydrogen chloride and tungsten hexafluoride are in use in semiconductor manufacturing.

“The Indian industry is well equipped to live up to this challenge. We adequately produce several key gases needed for the industry. Rest of the requirements of specialty gases can be met through imports, till the demand picks up,” said Saket Tiku, president of the All India Industrial Gases Manufacturers Association (AIIGMA).

As there are still uncertainties in the amount of investments that will come into semiconductors, industry players are not ready to speculate on the investment in the gas sector.

“We ourselves have already started taking steps to invest in some of these ultra-high purity gases, because to make electronics in semiconductor grade, the purity and quality of the gases is paramount. If you take the purity of oxygen, normally it is 99.5 per cent. What you need for semiconductors is 99.9999 per cent purity,” Jain added.

At present, Inox has a capacity of 3,400 tonnes per day (TPD) of liquid gases.

In 1999, US major Air Products and Chemicals had acquired 50 per cent stake in Jain family’s Industrial Oxygen Company, giving birth to Inox Air Products. If required, the company is set to utilise this global partnership to import gas for the semiconductor segment.