Another small monthly update with a brief transaction and performance update from February.

Performance

• February
• Return -0.04% (FTSE All World: -1.22%)
• TTWROR -0.67%
• Since inception (Jan 2024)
• TTWROR 27.87% (FTSE All World: 27.50%)

Transactions

Purchases

• Nippon Sanso
  $4091 (-1,97 %) (subsequent purchase)
• Philip Morris $PM (+0 %) (subsequent purchase)
• Nextera Energy $NEE (+0,71 %) (subsequent purchase)
• Wise $WISE (-4,25 %) (initial purchase)
• Alsea $ALSEA* (+2,96 %) (initial purchase)
• Kaspi $KSPI (first purchase)
• AMD $AMD (-7,86 %) (first purchase)
• Hims & Hers $HIMS (-7,12 %) (subsequent purchase

sales

• LVMH $MC (-4,43 %)
• 
  MSCI World $SUSW (-3,88 %) (partial sale)
• Hims & Hers $HIMS (-7,12 %) (partial sale)
• Nvidia $NVDA (-6,05 %) (partial sale)

Looking back now, you realize how many transactions you have made. From March there should be a maximum of 1-2 purchases and maybe 1-2 sales. If there are so many transactions again in the next update, feel free to reprimand me.

From sand to chip: how is a modern semiconductor made?

Reading time: approx. 10min

1) INTRODUCTION

Since 2023 at the latest and the rapid rise of Nvidia $NVDA (-6,05 %) semiconductors and "AI chips" in particular have been the talk of the town. Since then, investors have been chasing after almost every company that has something to do with the manufacture of chips, driving share prices to unimagined heights. However, hardly any investors really know how complex the value chain is within the production of modern chips.

In this article, I will give you an overview of the entire manufacturing process and the companies involved. Even if many of you have a vague idea that the production of modern chips is complex, you will certainly be surprised by how complex it really is in reality.

2) BASIC

The starting point for every chip are so-called wafers [1] - i.e. thin wafers, which usually consist of so-called high-purity monocrystalline silicon. In the field of power semiconductors, which primarily comprises chips for applications with higher currents and voltages, silicon carbide (SiC) or galium nitride (GaN) has recently also been used as the base material for the wafers.

In the so-called front end the actual core components of the chips - the so-called dies - are created and applied to the wafers. The dies are rectangular structures that contain the actual functionality of the later chip. The finished dies are then tested for their functionality and electrical properties. Each die that is found to be good is then integrated into the so-called backend where the individual dies are separated on the wafer. This is followed by the so-called packaging. The individual dies from the front end are then electrically contacted and integrated into a protective housing. In the end, this housing with the contacted die is what is usually called a chip chip.

Now that we have a rough overview of the overall process, let's take a closer look at the individual processes involved in producing the dies on the wafer. This is the area in which most highly complex machines are used and which is usually the most sensitive.

3) FROM SAND TO WAFER

Before wafers made of high-purity silicon can even be produced and the actual process for manufacturing dies can begin, the actual wafer must first be manufactured in almost perfect quality. To do this, quartz sand, which consists largely of silicon dioxide, is reduced with carbon at high temperatures. This produces so-called raw siliconwhich, with a purity of around 96%, is not yet anywhere near the quality required for the production of wafers.

In several chemical processes, which are carried out by Wacker Chemie
$WCH (-5,49 %) or Siltronic
$WAF (-0,69 %) are used to turn the "impure" silicon into so-called polycrystalline silicon with a purity of 99.9999999%. For every billion silicon atoms, there is then only one foreign atom in the silicon. However, this pure polycrystalline silicon is still not suitable for the production of wafers, as the crystal structure in the silicon is not uniform enough. In order to create the right crystal structure, the polycrystalline silicon is then melted again and a so-called ingotwhich is made from monocrystalline silicon is produced. A comparison between raw silicon and the ingot can be found in the following image [3]:

This ingot is then sawn into thin slices, which are then the final wafers for semiconductor production. The best-known wafer producers are Shin Etsu
$4063, (-3,4 %)
Siltronic or GlobalWafers
$6488.

4) FROM THE WAFER TO THE DIE

The wafers described in the previous section can now be used to produce dies. The overall process for producing dies basically consists of applying a large number of layers using various chemical, mechanical and physical processes. The overall process (depending on the product) takes approx. 80 different layers on the wafer, requiring almost 1000 different process steps and 3 months
non-stop production are required [4].

A macroscopic analogy is useful here, which I have also taken from [4]. You can compare the overall process for producing dies with baking a large multi-layer cake. This cake has 80 layers and the recipe for baking consists of 1000 steps. It takes 3 months to make the cake and if even one layer of the cake deviates from the recipe by more than 1%, the whole cake collapses and has to be thrown away.

In the first process steps, the wafer is covered with billions tiny little transistors are created on the wafer, which are then all individually electrically contacted in the following steps. The final steps consist of electrically connecting the transistors to each other, resulting in a complete electrical circuit [4]:

Each individual layer of the approximately 80 layers in the die requires highly specialized processes, which can be roughly summarized as:

• Applying masks: Photolithography, photoresist coating (applying photoresist)
• Apply material: Chemical Vapor Deposition (CVD), Physical Vapor Deposition (PVD), Atomic Layer Deposition
• Remove material: Plasma annealing, Wet annealing, Chemical Mechanical Planarization (CMP)
• Modify material: Ion Implanting, Annealing
• Material cleaning
• Inspecting the layers: Optical, Microscopical, Focused Ion Beam, Defect Inspection

Apply masks

Ultimately, a mask can be thought of as an enlarged copy of the structure of a special layer in the die. These so-called photomasks are then scanned using so-called scanners or steppers "copied" in reduced size onto the wafer. The best-known manufacturer of such lithography systems is ASML
$ASML (-7,33 %). It is currently the only producer of lithography systems that make it possible to produce structures smaller than 10 nanometers on the wafer. In today's powerful and modern chips, such as those found in smartphones, AI chips and processors, the smallest structures are around 3 nanometers in size. Other manufacturers of lithography systems for larger structures (10nm and larger) are Canon Electronics
$7739 or Nikon $7731 (-3,2 %) .

The photomasks - i.e. the enlarged "copies" of the structures - are produced by companies such as Toppan $7911 (-3,98 %) , Dai Nippon Printing
$7912 (-4,21 %) or Hoya $7741 (-5,41 %) manufactured. Systems for cleaning the photomasks or for applying the photoresist are produced, for example, by Suss Microtec
$SMHN (-9,74 %) for example.

Apply/remove/modify/clean material

As can be seen in the overview above, there are a variety of methods and processes for modifying the material of a particular layer. As a result, there is a lot of different equipment that can handle a process very well with incredible specialization. The best-known and most successful equipment manufacturers include Applied Materials $AMAT (-6,94 %), LAM Research
$LRCX (-10,47 %), Tokyo Electron (TEL)
$8035, (-6,02 %)
Suss Mictrotec, Entegris
$ENTG (-17,71 %) and Axcelis $ACLS (-10,71 %).

The material - for example, highly specialized chemicals - is of course also required for production. Companies such as Linde
$LIN (-2,24 %), Air Liquide
$AI (-2,82 %), Air Products
$APD (+0 %) and Nippon Sanso
$4091 (-1,97 %) are major manufacturers of process gases such as nitrogen, hydrogen and argon.

Inspect

As mentioned, every single layer in the manufacturing process of a die must be perfect in order to obtain a functional die at the end. Any small deviation or foreign particles can impair the functionality of the die. As the function of the die can only be checked precisely on the finished die, it is advantageous to inspect the individual layers for defects and deviations during production. Special machines are required for this, which must be able to do different things depending on the layer. Manufacturers of such machines include KLA
$KLAC (-7,66 %) or Onto Innovation
$ONTO (-13,7 %).

The following applies to almost all of the companies mentioned in this section: the companies are highly specialized and have quasi-monopolies on the machines for certain process steps. quasi-monopolies. Suitable equipment therefore usually costs several million dollars. In addition, some of the systems are so complex that they can only be serviced by the manufacturer's own service staff, which results in recurring service revenues for every machine sold. As a rule, each machine requires several highly specialized engineers to ensure long-term stable operation.

5) FROM THE DIE TO THE FINISHED CHIP

Once the wafer has been processed, the dies on the wafer are checked for functionality. There is highly specialized equipment for this, so-called probers. These probers test each individual chip several times, if necessary, to check the functionality implemented in the design. Manufacturers of such probers include Teradyne $TER (-11,71 %), Keysight Technologies
$KEYS (-11,15 %), Onto Innovation or Tokyo Electron. These probers have to control each individual die, some of which are only a few square millimetres in size, and contact the corresponding much smaller test structures with tiny needles. The testing process is sometimes outsourced to entire companies that offer die testing as a complete package. One example of such providers is Amkor Technology
$AMKR (-16,56 %).

The processed and tested wafer is now sawn to obtain individual dies. The dies that are found to be good are then integrated into a protective housing in the backend. The dies that have not passed the functionality test are either sorted out or (depending on the error pattern) processed as a variant with reduced functionality similar to those with full functionality. After a final functional test in the package, the chip is ready for use.

6) FOUNDRIES, FABLESS & SOFTWARE

Now that we have an overview of the complex process of manufacturing a chip, let's zoom out a little further to understand which companies perform which tasks in the semiconductor industry.

It's funny that not once in the manufacturing process has the name Nvidia $NVDA (-6,05 %) or Apple $AAPL (-6,25 %) has been mentioned? Yet they have the most advanced chips, don't they?

The pure production of the chips is done by other companies - so-called foundries. Companies like Nvidia and even AMD $AMD (-7,86 %) are in fact fablessThis means that they do not have their own production facilities but only supply the chip design and let the foundries manufacture the actual chip according to their design.

The design of a chip is like the blueprint for production - the foundries then take over the recipe creation and the actual production. There is special software for designing chips. Companies known for this software include Cadance Design
$CDNS (-4,11 %) and Synopsys $SNPS (-7,07 %). But also the industrial giant Siemens
$SIE (-7,02 %) now also supplies software for designing integrated circuits. Synopsys also offers other software for data analysis within foundry production.

Speaking of foundries; the best known foundry is probably TSMC
$TSM, (-4,48 %) which is the global market leader in foundries. TSMC designs itself no chips itself and specializes exclusively in the production of the most advanced generations of chips. Another major player that also masters the most advanced structure sizes is Samsung $005930. In contrast to TSMC manufactures Samsung also produces its own designs. Other large foundries are Global Foundries
$GFS, (-6,99 %) which was originally a spin-off from AMD and the Taiwanese company United Micro Electronics
$UMC. (-6,02 %)

The best-known fabless companies - i.e. companies without their own chip production - are Nvidia, Apple, AMD, ARM Holdings
$ARM, (-8,64 %)
Broadcom $AVGO (-8,37 %), MediaTek $2454 and Qualcomm $QCOM. (-8,69 %) In the meantime Alphabet $GOOGL, (-3,55 %)
Microsoft $MSFT, (-2,62 %)
Amazon $AMZN (+0 %) and Meta $META (-7,03 %) have designed their own chips for certain functionalities and then have them manufactured in foundries.

In addition to foundries and fabless companies, there are of course also hybrid models, i.e. companies that take on both production and design. The best-known examples of this are, of course, companies such as Intel
$INTC (+0 %) and Samsung. There is also a whole range of so-called Integrated Device Manufacturer (IDM)which for the most part only manufacture their own designed chips and do not accept customer orders for production. Well-known companies such as Texas Instruments
$TXN, (-8,2 %)
SK Hynix
$000660,
STMicroelectronics
$STMPA, (-10,77 %)
NXP Semiconductors
$NXPI, (-12,61 %)
Infineon $IFX (-7,23 %) and Renesas $6723 (-8,27 %) are among the IDMs.

FINAL WORD

The aim of this article was to provide an overview of the complexity of the semiconductor industry. I do not, of course no claim to be complete, as there are of course many other companies that are part of this value chain. As Getquin thrives on active exchange, I'll give you some food for thought to discuss in the comments below the article:

• feel free to link any other companies in the comments if you think I've forgotten any relevant ones
• what was the most surprising new information for you from the article?
• which companies from the article have you never heard of?
• before reading the article, did you know approximately how a modern chip is produced and what steps are necessary for this?

In general, I can recommend the 20-minute YouTube video at [4] to any interested reader. It provides an excellent animated overview of the manufacturing process of modern chips.

Stay tuned,

Yours Nico Uhlig (aka RealMichaelScott)

SOURCES:

[1] Wikipedia: https://de.wikipedia.org/wiki/Wafer

[2] https://www.halbleiter.org/waferherstellung/einkristall/

[3] https://solarmuseum.org/wp-content/uploads/2019/05/solarmuseum_org-07917.jpg

[4] Branch Education on YouTube: "How are Microchips Made?" https://youtu.be/dX9CGRZwD-w?si=xeV0TYgJ2iwNOKyO

⚡ Gas giants of the future: who will lead the energy race? 🏁

Company presentation

The four leading players in the global industrial gases market are Linde, Air Liquide, Air Products and Chemicals and Nippon Sanso Holding. Each of these companies has a long history and has developed into a major player over time:

- Linde was founded in Germany in 1879 and is today an undisputed market leader.

- Air Liquide was founded in France in 1902 and ranks second on the world market.

- Air Products and Chemicals was founded in the USA in 1940 and is number three in the market.

- Nippon Sanso Holding has its origins in a company founded in Japan in 1910 and is currently number four in the industry.

Historical development

The industrial gases sector is characterized by remarkable stability. The same companies have dominated the market for over a century, indicating high barriers to market entry and a particularly robust business model. In recent decades, there has been increasing consolidation:

- 2018 saw the merger of $LIN (-2,24 %) and Praxair, creating the new industry leader.

- 2016 $AI (-2,82 %) Liquide acquired its US competitor Airgas to strengthen its market position

$4091 (-1,97 %) Sanso benefited from the mergers of its competitors and was able to expand through strategic acquisitions in Europe and the US.

Business model

The four companies produce and distribute industrial gases such as oxygen, nitrogen and hydrogen, which are indispensable in numerous sectors, from the steel industry to medical technology. The business model is based on long-term customer relationships, technological expertise and highly efficient logistics that enable the gases to be transported and delivered safely and economically.

Core competencies and future prospects

The companies' core competencies lie in the efficient production and distribution of industrial gases and in their in-depth technical expertise. All four companies are increasingly focusing on growth markets such as hydrogen technology and electronic gases, which are seen as key areas for the future. In particular, the growing demand for clean energy sources and the development of new technologies create potential for further growth.

Market position and competition

The global market for industrial gases is dominated by these four companies:

- Linde is the clear market leader.

- Air Liquide follows in second place.

-$APD (+0 %) ranks third.

- Nippon Sanso is number four on the market.

Together, Linde and Air Liquide control around 63% of the global market share, underlining their supremacy in the industry.

Total Addressable Market (TAM)

The global market for industrial gases is growing continuously and is expected to continue to expand in the coming years. Although exact figures on the "Total Addressable Market" (TAM) are not publicly available, it is estimated that the global market for industrial gases will reach a value of USD 173.43 billion by 2030.

Share performance

The valuation and performance of the shares of these companies show considerable differences:

With a market capitalization of $221.43B, Linde is currently the most valuable of the 4 companies. Since the IPO on June 17, 1992, Linde has returned 10,041% and on a 3-year basis is at 55.72%. Air Liquide is at 44.28% on a three-year basis and at 3,248.2% since the IPO on January 2, 1992, clearly behind Linde. APC is at 5,183.8% since the IPO on January 2, 1990, ahead of Air Liquide but behind Linde. On a 3-year basis it is at 11.07%. Nippon Sanso is at 71% and has only reached 1,311.56% since the IPO on January 6, 1992, making it the worst of the four stocks.

For the development (company figures), a better view and more, check out the free blog:https://topicswithhead.beehiiv.com/p/gasriesen-der-zukunft-wer-wird-das-energie-rennen-anf-hren

Conclusion

If I were to focus on just one company, it would be a difficult decision. Therefore, I look at two stocks, but still go through the decision process thoroughly. When I bring together all the relevant information about the industry and my personal priorities, I tend to see Linde as the preferred choice. The industry requires capital and Linde is the best positioned in this respect. In addition, the larger companies clearly benefit from being able to leverage their size effectively with banks and customers. Linde is well positioned in both Europe and America, and recent developments in the US have increased its focus on shareholder return. As an established brand, Linde also offers excellent diversification.

Air Products and Chemicals is also interesting, but has weaknesses compared to Linde in its ties to "heavy industry". Although this can have advantages, it has also brought disadvantages in recent years. I therefore initially considered Air Liquide as a possible favorite. They are strongly positioned in many business areas and have a well-known brand, even if they have a "somewhat" weaker presence in the USA. However, their culture and domicile in Europe is super pronounced, which affects shareholder value a little.

If you want better diversification, which is the case with APC and Air Liquide as they cover different strengths, you should take the two, because you have to remember that Linde shares have only really gained in value in the last four years. Even though I personally would prefer Linde and Air Liquide, I actually think Air Liquide and APC are a better rational choice due to their diversified positioning and stable market position in the areas in which they operate.

And you buy shares for the future development and not the past.

"1, 2 or 3 You have to decide three fields are free. Pop! Plopp, that means stop, just one more hop, then it stays that way".

$LIN (-2,24 %)

$AI (-2,82 %)

$4091 (-1,97 %)

https://www.zdf.de/kinder/1-2-oder-3/titelsong-michael-schanze-100.html

$4091 (-1,97 %)

Quarterly figures 11.5.2023

EPS + 48% YOY

Sales + 18% YOY

Number 4 behind $APD (+0 %)
$LIN (-2,24 %)
$AI (-2,82 %) And valued much cheaper. 😊

Hello,

I would like to start a new series of articles "Chemistry in everyday life". In the meantime, I am still working on the contributions on bioenergy and e-fuels.

What do I actually invest in the category chemistry? In this series of contributions I would like to go into more detail about what you are actually invested in with some examples and illustrate application examples. I do not want to report further on the future potential. You have to determine this individually at your own discretion.

We turn air into money. The industrial gas manufacturers.

What are industrial gases?

Industrial gases are nothing more than gases produced on an industrial scale. So, according to the definition, almost anything in industry could be called an industrial gas.

Rather, these types of usages are called technical gases. They differ in the definition by their high degree of purity in the technical production. This already results in a conditional technical delimitation, which can only apply to gas mixtures that can already be described as "pure" in their composition. Due to the high degree of contamination in fossil carriers, natural fuel gases, such as natural gas and short hydrocarbons, such as methane, ethane, propane and butane, as well as natural carbon dioxide, are thus omitted.

So what can we use according to the definition?

The simplest gas mixture that everyone knows and should have at home is air. Roughly described, air consists of nitrogen N2, oxygen O2, noble gases and other small components. (Hydrogen, by the way, is not a component of air at all).

How can I decompose air?

The answer is quite simple: refrigeration.

Many mixtures of substances are thermally separated. Domestically, it can be easily explained in cooking. Some people add a shot of red wine to their well-known bolognese or tomato sauce. This must then be boiled out. The alcohol evaporates. A watery solution remains in the sauce.

You have to imagine it the other way around with air. Gases require extreme colds to liquefy. Nitrogen for example -196°C, oxygen -183°C.

Of course, it would not make sense to cool a certain amount of air down to this temperature. That would be very difficult without using ordinary cooling methods in general.

A remedy is the Joule-Thomson effect.

Simply explained:

You take a certain volume of gas. You now compress it. It becomes hot and the volume decreases. Now you expand this gas again. The heat is released to the environment, the volume is increased again, but the gas itself becomes cold.

If you now assume extremely large pressure differences, this leads to air liquefying.

Since the gases contained therein now have different condensation temperatures, they can be fractionated.

Imagine a container in which different temperatures prevail. At the bottom of the container it is warmest. Towards the top it gets colder. Consequently, you would have a layer of oxygen at the bottom, nitrogen and all other gases above it.

But this statement is only conditionally correct, because the order is of course different. In the consideration I have considered only nitrogen and oxygen as the largest components. In between would be the condensation points of various noble gases.

A very simple GIF is attached.

The major competitors.

Historically, it is actually disputed who can now first claim the discovery of air separation. Many roads lead to ... Germany? England?

The first large-scale refrigeration machine was invented by Carl von Linde between 1892/93. However, it was based on carbonic acid. Therefore not comparable to the technical approach used today.

In 1895, the British researcher William Hampson filed a patent for air liquefaction. Linde just a few days later in Germany.

Hampson later sold his patent to the British Oxygen Company (BOC). What became of Linde's patent is still clear today in everyday white lettering on a blue background. In 2006, Linde took over $LIN (-2,24 %) the British competitor. The British business is still operated under the BOC brand today.

A little later in 1902, Georges Claude also filed a patent for the liquefaction and separation of air - the foundation stone for Air Liquide $AI (-2,82 %) .

The still significant competitor Air Products & Chemicals $APD (+0 %) did not enter the market until 1940. Originally as a small-scale supplier of oxygen generators for the U.S. military.

The typical Far East representative Nippon Sanso $4091 (-1,97 %) was originally a manufacturer exclusively for oxygen. It was not until 1935 that the first large-scale air separation succeeded. The company received great notoriety and market share on a global scale in 2016. During the merger of Praxair and Linde, Praxair's European parts were transferred to Nippon due to antitrust conditions. In the European market, they are more known under the brand name "Nippon Gases".

But why industrial gases now?

All manufacturers are in competition not only for air. A very large part of their market is also made up of industrial gases, especially hydrogen. Hydrogen is produced on a large scale by steam reforming.

A synthesis gas consisting of short-chain hydrocarbons, such as methane, for example, is heated in a reactor with steam to such an extent that methane breaks up into its constituent parts. Hydrogen and carbon monoxide are produced, which are washed out in a further step to form carbon dioxide and further hydrogen.

The intended use of the individual gases

Industrial gas manufacturers have quite a considerable moat. Air is (still) a free raw material. It hardly gets any cheaper, so to speak.

Nitrogen:

The largest component of air enjoys huge economic benefits. Domestic frozen goods are usually "snap-frozen" with nitrogen, and in industry it is used for general protection as an inert gas.

Nitrogen continues to form the basis for all agrochemical and fertilizer technology. Many explosives are also nitrogen compounds.

Application in liquid form is found in research in superconductors, but also in the storage of biological and medical samples, as well as sperm and ova.

In civil engineering, there is application in soil freezing, as well as irreplaceable importance in materials technology, with regard to steel utilization and recycling of industrial metals.

Oxygen:

Without oxygen, no basis for steel. Each process of combustion can be different by a specific concentration of oxygen.

But also in a mixed ratio with nitrogen it is medically administered as breathing air.

Furthermore, one bubbles oxygen in lakes whose ecosystem has died to regenerate this.

The chain of examples for oxygen and nitrogen could of course be extended countless times. These are only some examples, which are to be regarded quite with a moat.

Further examples can be found in the field of welding. Modern welding processes hardly ever use acetylene as the welding medium. Welding of higher quality is achieved using inert gases. This is known as "inert gas welding". This describes subgrouping of arc welding. Whether MAG, MIG or flux-cored welding: materials and fabrications of our time must always meet the highest standards. In our industry, this applies above all to high quality standards, but more importantly to safety standards, which are less reliable in comparison with other welding methods. (Cold welding by man power excluded. The industrial workers, especially mechatronics and mechanics know what I mean in this respect 😂).

I hope I could put you in the right mood for the series of contributions. Which everyday object should I explain soon and which listed companies are involved in this?

All my suggestions originate with to a large extent my head. One may hardly believe it.

Additionally I always use the encyclopedia of chemistry (ISIN 978-3131027597)

Good Bye, Plug Power. 📉 $PLUG (-6,74 %)

In the meantime, the questions about the producer for fuel cells accumulated again. I had already clarified most of the contra-arguments in my anti-H2 series.

Nevertheless, I would now like to explicitly debunk the bubble around Plug and why this company does not deserve its rating.

I hope to present some comprehensible arguments. Therefore, please keep in mind that this is just an opinion.

1. the company

Plug was founded in the late 1990s as a joint venture between DTE and Mechanical Technology. $DTE (-1,18 %) and Mechanical Technology. Listed on the stock exchange since 1999, it stirs up visions of the future. The company's image is modern, fully on trend. The technology is presented as groundbreaking and pioneering. The company has been able to attract some large and well-known investors such as SK $034730 have been attracted. The ETF hype for renewable energies reinforced this bias. Everyone wants to be in on it. No one wants to miss out, but no one wants to bet on the wrong horse either.

2. company structure and growth drivers

Plug is subdivided into various specialized subject areas. The overview and insight for interested parties are exemplary. On a higher level, Plug Power can be assigned to the areas of chemistry and energy.

The aim is to produce hydrogen sustainably with the aid of proton exchangers. For this purpose, the company offers entire electrolysers and fuel cells, as well as a wide range of equipment from the field of hydrogen applications.

The growth is considerable, but not in the core products of fuel cells and infrastructure.

According to the annual reports, refrigeration and engineering technology are achieving the greatest growth and therefore now account for half of fuel cell sales. The largest revenue is generated in the domestic US. After all, sales growth of a good 20% could be achieved here in 2022. The regions of Europe and Asia could be developed as a market.

3. hard facts.

So what's the problem? It all sounds very hip and is fully in line with the trend. You even grow.

Plug Power has always burned the money. There is no sustainable cost structure in sight here. The business is unprofitable. Capital increases are the result. Plug itself holds only 3% of its own shares. Just under 86% are in free circulation. By the way, each share has voting rights. This is therefore completely useless for a sustainable business model, since the company's own management can have virtually no influence on the business. Here, one is dependent on investors to constantly obtain fresh capital in order to be able to finance the company itself.

And the finances? - A horror story for any serious investor. No profits generated. More than a halving of the company's value from 2021 to 2022. No free capital.

And the future estimates? These are generally to be taken with a grain of salt with any stock, as analysts, some of them completely unfamiliar with the subject, refer to the strangest studies.

But even so, Plug will only be economically profitable in the distant future. Until then, the company will continue to happily destroy its own balance sheet and will not be able to eliminate the debt factor for what feels like an eternity. Where will the investors' capital come from then?

4 Destructive competitive pressure.

I wrote it in my 1st post, which was to debunk the hype about hydrogen. The industry is a superlative shark tank. Of course, people have recognized the market for hydrogen as an industry of the future. However, why should one focus on these small fish, such as Nel $NEL (-2,93 %) , Plug or Ballard $BLDP (-2,87 %) speculate?

The market for hydrogen is already there and divided among the top dogs. Hydrogen is not a new innovation! The difference is only in the sustainable production. However, almost all hydrogen producers invoke proton exchangers. The efficiency screw is technically limited. Therefore, one can only look in vain for breakthrough innovations between the individual companies in the producer list. The decisive factor will be market power and the associated pricing power through availability and supply agreements.

Please bear in mind:

The industrial gas producers, especially Linde $LIN , Air Products $APD (+0 %) , Air Liquide $AI (-2,82 %) and also Nippon $4091 (-1,97 %) have decades of experience in their field. All of them have sustainable and solid business models. Although their stock market valuations are debatable, the facts and their dominance of the markets outweigh them.

In addition, there are other well-known companies in the energy sector with huge amounts of capital up their sleeves. Among them the Europeans Total $TTE (-4,86 %) , Shell $SHEL (-4,82 %) and BP $BP. (-6,19 %) . Even today, hydrogen is an indispensable part of the refinery process. A hydrogen strategy is therefore inevitably conducive to the independence of oil companies from existing hydrogen producers.

5. a possible outlook.

Is plug sustainable? Certainly not. For that, the company is already in an advanced internal downward spiral. One should rather hope for damage limitation here. In its current state, Plug Power is not competitive as a company. The innovations that the company is striving for require additional capital that it does not have. In this respect, it is almost logical that the company will lose out in the further course of development. People have thrown themselves over within the value chain because they wanted to be more independent. A spin-off of certain areas would have been overdue in order to be able to concentrate on the core competencies.

I'm sure some people will want to argue, "But the inflation reduction act ..."

Keep in mind that this is a subsidy package designed to stimulate investment. Plug no longer has this money.

Therefore, in a continuing speculation, one can only hope that investors can be found to turn Plug around or even hope for a takeover by major competitors. However, it is simply exaggerated to believe that a company with sales of just under $700 million and sheer combustion euphoria can live up to a valuation of just under $6 billion.

Why "green" hydrogen can't live up to the hype. - Part 2

Values Community,

First of all, a big thank you that my last contribution on the subject of "hydrogen" was so well received or even sourly received.

In order to understand the context, I ask you to read part 1 as well, so that as few misunderstandings as possible occur.

https://app.getquin.com/activity/MDWIzGWvkU?lang=de&utm_source=sharing

Here again 5 reasons why the stock market values "green" hydrogen too high. Numbering follows the last post.

Please take a more speculative view. Clairvoyance is not my superpower.

6. storage medium, no energy carrier!

Contrary to the perception of many, hydrogen does not serve as an energy carrier, but as a storage medium.

Hydrogen can be produced extremely cheaply via electrolysis in the event of overproduction on the power grid. Why? The efficiency does not matter at all. The electricity is surplus anyway and is not needed anywhere else.

In fact, we would already have this surplus of electricity in Germany today. Due to the high prices, however, it is probably more lucrative to export it than to promote domestic electrolysers with it. It doesn't matter whether the electricity is generated from renewable sources or fossil fuels, and thus at least laying the foundations for a sustainable hydrogen industry. I can recommend the negative success story of the highly praised "WunH2" project in cooperation with Siemens. $SIE (-7,02 %) , can be recommended. The failure should, speculatively, have a signal effect.

https://www.bundesnetzagentur.de/SharedDocs/Pressemitteilungen/DE/2023/20230104_smard.html#:~:text=Deutschland%20war%20im%20Jahr%202022,um%2051%2C1%20Prozent%20gestiegen.

7. geopolitics - finally new dependencies again.

Hydrogen should serve the general public accordingly for "everything". Heating medium, alternative fuel, chemical raw material, ...

However, nobody questions the production sites. These will not be able to take place in the temperate climate zones. Europe is also generally quite limited due to population density. This means that production sites are already being relocated to more southerly countries, such as those bordering the Mediterranean or African states. There are also concrete plans for hydrogen pipelines to Europe. Algeria, Angola, Egypt, ... These are all countries that are generally known for their legal security and economic obligations.

But what is the disadvantage, although it would of course be more efficient because of the solar intensity? We are once again becoming dependent, but in the case of an "energy turnaround" this will hit us much harder than the last time we were dependent on Russia.

None of today's investors can say in retrospect that they did not know this. $PLUG (-6,74 %) are already reaping the fruits of great investments, especially in Egypt, according to one magazine, or even the German flagship company $PNE3 (-0,28 %) with its involvement in South Africa.

8. safety first!

Hydrogen is probably the most dangerous gas in terms of explosiveness that could be handled. From a volume concentration of 18%, it inevitably leads to an explosion on contact with atmospheric oxygen! Furthermore, it is still flammable from 4% volume concentration.

Who wants to be around in the event of a leak from a pipe, container, motor vehicle, etc.? Volunteers? - Please don't!

Examples for the extent of such a reaction is for example the crash of the Hindenburg. Here, however, "only" a fire occurred, because the concentration of oxygen in the air was too low.

A possible solution would be the mixture with nitrogen. However, according to the risks involved, this would mean that a volume concentration ratio of approx. 95/5 would have to exist. This aspect alone again speaks in favor of the air separation giants Linde $LIN , Air Liquide $AI (-2,82 %) , Air Products $APD (+0 %) or also Nippon $4091 (-1,97 %) to name a Japanese company, which would find new sales opportunities in the field of nitrogen for safety reasons.

9. storage and capacities

A topic that is very rarely addressed, but is part of every value chain - storage.

It's not as simple as people like to think: "Let's just do away with natural gas and use the existing infrastructure for hydrogen." Nonsense! Hydrogen and natural gas are fundamentally different in their makeup! Hydrogen is the element with the highest energy density, but it is also the most finely porous. This means: Hydrogen would still volatilize in existing storage facilities because the porosity, i.e. the ratio of the void volume to the total volume, of the materials is for the most part insufficient in Germany.

Hydrogen is transported and stored in liquid form. Hydrogen is compressed to 700bar and cooled in isolation at -250 degrees Celsius.

This would benefit plant manufacturers such as Sulzer $SUN (-6,47 %) , Voestalpine $VOE (-1,73 %) or Hexagon Composites $HEX (-1,86 %) .

In context, this means that the infrastructure must first be created before we can even think about regenerative hydrogen in the future. In my contribution to Vorwerk $VH2 (+0 %) from which I would advise against at the moment, I also explained profiteers of the infrastructure change. For example Vinci $DG (-0,45 %) , Ferrovial $FER , Hochtief $HOT (-1,43 %) or Strabag $STR (-2,33 %) .

Realistically, it will be in Germany only in 20+ years, which for me again does not reflect the current stock market values of the H2 companies.

For the time being, I exclude the adsorption of hydrogen to solid or liquid media. From the current point of view, it does not seem to be a mass solution for the whole society.

10. mobility in individual traffic

The biggest dichotomy, with many still seeing renewable hydrogen in the race, is private individual transport.

The electric car will dominate private households and rightly so! The big disadvantage of the hydrogen car here is efficiency.

While electric cars can use electricity without further conversion and have an efficiency of between 70% and 90%, the form of energy in the hydrogen car must be converted several times.

Here, green hydrogen is produced with the help of electrolysis. For transport, this is compressed and liquefied. Only then is the vehicle refueled. The back reaction of the electrolysis now takes place by means of a fuel cell. An illustration of this can be found in the appendix.

Nevertheless, it is of course up to you to decide which fuel form you will prefer in the future, and this is in no way intended as an appeal to drive an electric car in the future. Compared to other carriers, however, it is the most sensible option in terms of efficiency.

I hereby expressly ask you to note that this is exclusively about the passenger car in this point. For reasons of resource conservation alone, I am in favor of the fuel cell as a drive system for freight transport on roads and railways, as well as in aviation and at sea.

Further energy sources and possibilities of the future power mix I will explain in further contributions.

Of course, if there is also interest, the pro-hydrogen arguments can also be brought to light in further articles. Because these outweigh without question. Nevertheless, the hype, as it is currently traded, is simply unjustified and at least 20 years too early. The stock market may trade the future, but dreaming will be punished.

Planned and already in process is:

- Why it still makes sense to invest in oil and gas producers for 30+ years.

- Waste-to-Fuel - Away with the garbage!

- Regenerative methanol production and the real opportunities for C02 reduction.

Companies traded on the stock exchange in everyday professional life

Since I am @Simpson nominated, I now grant an insight into listed companies in my daily professional life.

Briefly about me: I am a mathematician and work in the semiconductor industry in a listed company.

Starting with the software: pretty much all computers in the office run Windows and Office from $MSFT (-2,62 %). The PC's and the monitors themselves are all from $HPQ (+0 %) with keyboard and mouse from $LOGN (-16,04 %). The telephone system is WebEx from $CSCO (-8,82 %) and the work phones are from $AAPL (-6,25 %) with $DTE (+0,36 %) contract (and that although next door $VOD (+0,5 %) sits). In addition, there are large monitors in each conference room from $DELL (-17,01 %).

In the production of the semiconductors itself there are of course many machines from $ASML (-7,33 %), $CAJ (-6,21 %) and $7731 (-3,2 %). The many industrial gases needed come from $LIN , $AI (-2,82 %) and $4091 (-1,97 %). The basic material and chemicals come among others also from $WCH (-5,49 %) and $BAS (-5,22 %).

The purchasers of the finished chips then include, for example. $VOW3 (-2,69 %) , $BMW (-2,73 %) , $MBG (-2,59 %) and $TM (-5,52 %). But also $V (-2,64 %), $AAPL (-6,25 %) and $SMSD (-4,83 %) are customers.

I have certainly forgotten a lot, but as an insight it should be enough I think.

I nominate @DonkeyInvestor , @GoDividend and @Divmann (sorry if someone has already been nominated, I don't have an overview anymore).

#boersengehandelteralltag