Rare Gases, Real Consequences: How Neon and Krypton Shortages are Reshaping the Industrial Gas Market

The global industrial gas market-also referred to as the specialty gases market, bulk industrial gases market, or technical gases industry-plays a fundamental role in powering modern manufacturing, healthcare, energy, and electronics sectors. While much of the attention is often directed at major gases like oxygen, nitrogen, and hydrogen, a quieter crisis is unfolding in a corner of the industry: the supply volatility of rare noble gases like neon, krypton, and xenon. These gases, although produced in small quantities, are indispensable for technologies ranging from semiconductor manufacturing to aerospace propulsion.

The growing scarcity and geopolitical entanglements of these rare gases are now prompting high-tech industries to rethink their sourcing strategies and compelling suppliers to diversify their operations. This emerging bottleneck is quietly but significantly reshaping the dynamics of the industrial gas market.

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According to Future Market Insights, by 2034, the market has the potential to reach USD 158.19 billion, by assuming a pace of 7.80% over the forecast period.

Rare Gases: Small Volume, Big Impact

Rare gases, especially neon, krypton, and xenon, are derived primarily as byproducts of air separation during the production of oxygen and nitrogen. While they represent only a fraction of total industrial gas output, their importance is outsized in advanced manufacturing. Neon is essential for excimer lasers used in photolithography, a key step in semiconductor chip production. Krypton and xenon are used in lighting, space propulsion, and medical imaging.

Unlike bulk gases, these rare gases are not evenly distributed globally. Prior to 2022, Ukraine supplied over 50% of the world's purified neon gas, with most of the rest coming from a handful of suppliers in China, South Korea, and the U.S. This geographical concentration has made the supply of these gases highly vulnerable to geopolitical shocks.

The Semiconductor Sector's Wake-Up Call

The 2022 war in Ukraine served as a stark reminder of just how fragile global supply chains for rare gases can be. With key Ukrainian companies like Cryoin Engineering and Ingas halting production due to the conflict, neon prices skyrocketed by over 500% in a matter of weeks. This triggered ripple effects throughout the semiconductor industry, which was already grappling with supply shortages due to the pandemic-era disruptions.

Chipmakers, particularly those in East Asia and the U.S., began scrambling to find alternate sources or reclaim neon from spent gas mixtures-a process that is both technologically complex and economically taxing. ASML, the Dutch photolithography giant, publicly acknowledged that while short-term supplies were secured through stockpiling, long-term stability required fundamental changes in how rare gases are sourced and recycled.

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Supply Chain Fragmentation and Regionalization

This crisis has forced the industrial gas industry to reevaluate its sourcing models. One significant trend emerging is regional gas independence, particularly among countries investing in high-tech manufacturing. The United States, for example, passed the CHIPS and Science Act not only to boost domestic chip production but also to encourage infrastructure for rare gas purification and recovery.

Air Products and Chemicals, a major U.S. industrial gas supplier, announced in 2023 the expansion of its Arizona facility to include neon and krypton recovery units aimed specifically at supporting the semiconductor sector. Similarly, China has accelerated investments in domestic air separation plants with rare gas extraction capabilities to reduce its reliance on foreign supply.

Recycling and Gas Recovery Technologies

Given the extreme scarcity and price volatility of these gases, gas recovery and recycling technologies are gaining ground as both a sustainability measure and a risk mitigation strategy. Companies are investing in high-efficiency cryogenic distillation and membrane separation units capable of recovering rare gases from exhaust streams in chip fabs and lighting facilities.

In Japan, Showa Denko developed a xenon recovery process that captures and recycles over 90% of xenon gas used in flat-panel display manufacturing. Meanwhile, Korean firms are exploring advanced purification systems to reclaim neon from contaminated gas mixtures. These developments reflect a shift from linear consumption models to circular supply chains, a concept relatively new in the industrial gas domain.

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Market and Regulatory Implications

The reconfiguration of rare gas supply chains has significant implications for the broader industrial gas market. Prices of neon, krypton, and xenon are now more volatile, not only because of supply disruptions but also due to increased demand from sectors like AI-driven computing and electric vehicles, both of which require highly advanced microchips.

This volatility is reshaping procurement strategies across industries. Many buyers are opting for long-term contracts with gas suppliers, tying price to production benchmarks and geopolitical stability clauses. Additionally, environmental regulations in the EU and the U.S. are pushing for better tracking of greenhouse gases, including rare gas emissions, compelling producers to invest in cleaner, closed-loop production systems.

Governments are also playing a role. In 2024, the European Commission added krypton and xenon to its "Critical Raw Materials" list, offering subsidies and research funding to companies developing new extraction and recycling methods. Such policy support is likely to fuel innovation and shift market power toward vertically integrated suppliers with rare gas capabilities.

Top Investment Segments in the Industrial Gas Market

By Product Type:

- Oxygen
- Nitrogen
- Carbon dioxide
- Hydrogen
- Argon
- Acetylene
- Others

By Application:

- Manufacturing
- Healthcare
- Food and Beverages
- Metallurgy and Glass
- Chemicals and Energy
- Retail
- Others

By Distribution:

- On-site
- Bulk (Liquid Gas Transport)
- Cylinder (Merchant)

Different Regional Markets are as Follows:

- North America
- Europe
- Asia Pacific
- Middle East and Africa
- Latin America

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This release was published on openPR.