CompanyGraph
Linde plc
LIN · United Kingdom
Produces industrial gases like oxygen, nitrogen, and hydrogen from air, then pipes them directly to steel mills, refineries, and chip factories under long-term locked-in contracts.
Linde builds cryogenic plants that chill atmospheric air below -180°C to separate it into oxygen, nitrogen, argon, and rare gases, then pipes those gases directly into steel mills, refineries, and semiconductor fabs through dedicated connections that are physically fused to a single customer's site. Because each plant takes more than 72 hours to restart after a shutdown and can only recover its fixed costs by running continuously, Linde must sign a 10-to-20-year take-or-pay contract with an anchor customer and build the pipeline to that customer's fence line before construction even begins — which means no volume can be redirected elsewhere if that customer's demand falls. Along the Gulf Coast, Linde has extended this logic into a hydrogen pipeline network that connects multiple refineries and chemical plants along a shared corridor, allowing hydrogen to be balanced across the network in a way no single on-site plant could manage; replicating that network would require a competitor to simultaneously win long-term commitments from dozens of customers across the same geography, a coordination problem that took Linde decades of incremental contract-and-build cycles to solve. The fragility hiding inside that strength is geography: because the Gulf Coast pipeline infrastructure is fixed in place and cannot be rerouted, a sustained petrochemical downturn or major hurricane damage across that corridor would collapse the load-balancing function that makes the whole network worth more than the sum of its individual plants.
How does this company make money?
The largest revenue stream comes from take-or-pay contracts for on-site plants, where the customer pays a fixed amount every period no matter how much gas they actually use. Customers not connected by pipeline receive liquid gas deliveries by tanker truck and pay per unit. Smaller customers rent cylinders and pay separately for the gas inside them. Semiconductor manufacturers pay a premium above standard pricing for ultra-high purity electronic gases, because the specifications are far tighter and the cost of a bad batch — a halted chip production line — is enormous.
What makes this company hard to replace?
On-site customers are locked into take-or-pay contracts lasting 10 to 20 years, which require them to pay for minimum gas volumes regardless of whether they use them. Semiconductor fabs face an additional barrier: qualifying a new gas supplier for electronic-grade specifications takes 18 months or more of testing and validation before that supplier's gas can legally touch a production wafer. The dedicated pipelines and on-site plant investments create a physical tie between supplier and customer that is expensive and disruptive for either side to undo.
What limits this company?
Every plant must be pre-sold to a single customer before it is built, because the pipeline runs to one fence line and the economics only work at near-full, unbroken output. If that anchor customer's demand drops, the plant cannot simply redirect its gas to someone else — the pipe only goes one place. Growth requires winning a new long-term contract, then building entirely new dedicated infrastructure for that specific customer, one site at a time.
What does this company depend on?
The company cannot run without continuous electrical power to drive the cryogenic compression and refrigeration systems that keep plants below -180°C. It needs liquid nitrogen dewars and cryogenic tanker trucks to deliver gas to customers not connected by pipeline. It depends on the pipeline infrastructure itself to reach anchor customers like steel mills and chemical plants. Producing electronic-grade gases for chip factories requires ultra-pure feedstock materials and clean room facilities. Helium supply depends on natural gas processing plants in Qatar, Algeria, and the US Gulf Coast — sources the company does not control.
Who depends on this company?
Semiconductor fabrication facilities need nitrogen, hydrogen, and specialty gases at 99.9999% purity for wafer processing; without that supply, production lines would shut down immediately. Steel mills receive pipeline oxygen to run their blast furnaces; if that oxygen stopped, they would be forced to switch to less efficient electric arc furnaces. Hospitals and medical facilities rely on medical oxygen cylinders for patient breathing therapy and surgery, and any interruption would directly affect patient care.
How does this company scale?
The basic plant design and cryogenic distillation process can be replicated in new regions using standard engineering and established construction methods, so geographic expansion does not require reinventing the technology. What does not get easier is winning each new major customer: every large industrial site needs its own dedicated pipeline, its own on-site plant, and its own long-term contract negotiated and built from scratch. Each new customer is essentially a one-off infrastructure project.
What external forces can significantly affect this company?
The European Union's emissions trading system and carbon border adjustment rules raise costs for energy-intensive cryogenic operations, since these plants consume large amounts of electricity. China's push for semiconductor self-sufficiency restricts exports of electronic gases and forces local production, complicating supply into that market. Natural gas price swings affect both the availability of helium from processing plants and the economics of hydrogen production.
Where is this company structurally vulnerable?
If a sustained petrochemical downturn cut demand across the Gulf Coast at the same time — or if hurricane damage severed pipeline connections across that corridor — the load-balancing that makes the whole network valuable would collapse. The pipes are buried in one geography and cannot be moved. There is no other industrial corridor with enough refineries and chemical plants nearby to absorb the stranded capacity.
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