Semiconductor electronic-grade chemical manufacturers have initiated price increases. Surging demand for AI-related chips is driving a sharp rise in demand for upstream materials. Meanwhile, upstream chemical raw materials such as fluorspar, sulfuric acid, and propylene are experiencing sustained price hikes due to Middle East geopolitical tensions and a global tightening of chemical production capacity. This cost pressure is being transmitted down the supply chain to semiconductor electronic chemicals. Prices for electronic-grade hydrofluoric acid (HF) and electronic-grade isopropanol (IPA) are being adjusted upward simultaneously, with leading chemical producers like Formosa Plastics Group and Shiny Chemical confirming price adjustment plans.
Formosa Plastics Group is a significant supplier of G5 electronic-grade HF and IPA in the Asia-Pacific region, representing a key secondary source for wafer fabs in Taiwan and mainland China, apart from mainland manufacturers. Shiny Chemical is a core local supplier for Taiwan Semiconductor Manufacturing Company (TSMC), specializing in the purification of electronic-grade IPA. Formosa Plastics Group has announced price increases for both of these key electronic-grade chemicals. The company stated that the main raw materials for electronic-grade HF are sulfuric acid and fluorspar, whose prices have been rising continuously. Consequently, it will "appropriately adjust" the selling price of its electronic-grade HF products in the third quarter. For electronic-grade IPA, rising propylene costs will be reflected in its pricing, with the market gradually entering a price adjustment phase.
Shiny Chemical indicated it had already raised prices in the second quarter in response to raw material cost increases. It will continue to monitor raw material price trends closely and does not rule out further price hikes in the third quarter to reflect costs.
Both electronic-grade HF and IPA are critical materials in wafer manufacturing, with applications spanning GPUs, HBM, and advanced processes below 2nm. Electronic-grade HF is a core material for wafer etching and surface cleaning. G5 grade (7N-11N ultra-high purity) is suitable for advanced processes (2nm-14nm), GPUs, HBM, and other high-computing-power chips, requiring metal impurity control at the parts-per-trillion (ppt) level, which presents extremely high barriers in technology, certification, and production capacity. Electronic-grade IPA is a key cleaning solvent in semiconductor photolithography, packaging, and PCB precision manufacturing, used to remove microparticles and organic contaminants from wafer surfaces, making it a foundational material for maintaining yield rates in advanced processes.
Analysis indicates that, compared to general chemical products, electronic-grade HF and IPA must possess extremely high purity and undergo lengthy verification and customer certification before being adopted by wafer fabs. Once a supplier qualification is secured, the supply relationship is typically stable, granting these products relatively high technical barriers and pricing power.
Regarding electronic-grade HF, the global high-end G5 market has long been dominated by Japanese companies (Stella Chemifa, Morita Chemical Industries). However, their main facilities have long service histories and low willingness to expand, limiting growth in high-end supply. Although several Chinese companies (such as Do-Fluoride, Juhua Group, Befar Group, Sanmei Chemical) have achieved G5-grade mass production, high-end capacity in the near to medium term still struggles to match the rapid growth of semiconductor demand, maintaining a tight supply-demand balance.
For electronic-grade IPA, overseas companies (Tokuyama, Sumitomo Chemical) still monopolize the high-end market. Domestic Chinese manufacturers (Jianghua Microelectronics, Danuoer, Jingrui Electronic Materials, XinHua Group, Xilong Scientific) are accelerating capacity expansion and technological upgrades, steadily advancing the localization process.
Huatai Securities believes that on the domestic supply side, although several companies have achieved mass production of G5-grade products, high-end product capacity remains insufficient to meet the rapidly growing semiconductor demand. The supply-demand balance for high-end G5-grade products is likely to remain tight in the near to medium term.
Relevant Stocks
Dongyue Group (00189): Possesses production capacity for anhydrous hydrofluoric acid (AHF), a basic raw material, and is developing G5 electronic-grade hydrofluoric acid. It also produces supporting electronic fluorinated fluids.
Befar Group (06745): One of the few domestic companies in China to achieve mass production of G5 electronic-grade hydrofluoric acid, with an annual G5 capacity of approximately 6,000 tons.
Sinopec Corp (00386): One of China's largest propylene producers. Propylene is the most critical raw material for isopropanol manufacturing, accounting for over 70% of production costs. It is a major supplier of propylene to the vast majority of domestic isopropanol plants (including Wanhua, Satellite, and various IPA purification enterprises).
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