Benefiting from the rapid development of downstream industries, continuous iteration of advanced technologies, and the overarching trend of domestic substitution, the electronic materials sector is consistently encountering favorable development opportunities. In the realm of semiconductor materials, attention should be paid to industry shifts prompted by AI and advanced packaging, as achieving self-sufficiency in semiconductor materials holds profound significance. For PCB materials, the focus is on the demand growth for high-frequency, high-speed resins, and electronic glass fabric spurred by the rapid advancement of AI. Regarding OLED materials, key areas include the increasing penetration rate of OLEDs, the development of new display technologies, and the corresponding domestic substitution of related materials. The firm maintains an "Overweight" rating on the sector.
The global semiconductor materials market continues its growth trajectory, buoyed by the overall recovery of the semiconductor market and increased demand for advanced materials driven by high-performance computing and high-bandwidth memory manufacturing. Global sales of the semiconductor materials market reached $67.5 billion in 2024, a year-on-year increase of 3.8%; it is projected that the global market size could exceed $87 billion by 2029, with a CAGR of 4.5% from 2024 to 2029. While China has achieved production layout or mass production for most semiconductor materials, the overall localization rate for semiconductor materials in China is approximately 15%, with wafer fabrication materials below 15% and packaging materials below 30%, remaining heavily reliant on imports, especially in high-end segments. Chinese companies are steadily expanding capacity and investing in R&D for various key semiconductor materials such as CMP polishing materials, photoresists, precursors, electronic specialty gases, and advanced packaging materials, positioning themselves for gradual scale growth and technological iteration, which is expected to continuously improve the localization rate of semiconductor materials.
Printed Circuit Boards (PCBs) serve as the hardware carriers for integrated circuits, and Copper Clad Laminates (CCLs) are the fundamental materials for processing PCBs. Electronic resins, electronic glass fabric, and copper foil are the primary raw materials for CCLs, collectively accounting for about 87% of CCL production costs. Benefiting from the global shift of the PCB industry to China, the domestic CCL industry has developed rapidly, making China the world's largest producer of CCLs. Estimating that electronic resins and electronic glass fabric account for approximately 26% and 19% of the cost respectively, the global market size for electronic resins/electronic glass fabric used in CCL production in 2023 was approximately $3.302 billion/$2.413 billion, with the Chinese market size around $2.418 billion/$1.767 billion. The rapid development of 5G communication technology, automotive intelligence, alongside surging demand from data centers and cloud computing, is driving the CCL industry towards high-frequency and high-speed evolution. Electronic resins like PPO, hydrocarbon resin, bismaleimide triazine resin, and PTFE are expected to become mainstream materials for high-speed CCLs in the AI server era, with domestic substitution steadily advancing. Furthermore, driven by demand from emerging markets like AI, the market for high-end electronic yarn with low dielectric constants, low thermal expansion coefficients, and high-performance electronic glass fabric is experiencing rapid growth. The global high-end electronic glass fabric industry is characterized by an oligopolistic structure dominated by Japanese firms; amidst supply-demand gaps, Chinese companies are accelerating domestic substitution efforts.
Global OLED panel shipments are growing steadily, with penetration rates expected to continuously rise in sectors like smartphones, tablets, laptops, and automotive displays. In the first half of 2025, China's share of the global display panel market exceeded 50% for the first time. Domestic panel manufacturers are successively establishing high-generation OLED production lines, and new technologies like stacked OLED are being progressively implemented, further driving demand for OLED materials. Global sales of OLED display materials reached $2.44 billion in 2024 and are projected to reach $8.498 billion by 2031, representing a CAGR of 19.8% from 2025 to 2031. The market size for OLED organic materials (including terminal and front-end materials) in China was approximately RMB 5.7 billion in 2024, a significant 31% year-on-year increase. Currently, the localization rate for general OLED auxiliary materials is about 12%, while for terminal materials it remains below 5%. Domestic manufacturers are continuously making breakthroughs in localization. Concurrently, as domestic OLED panel capacity and market share expand, the market space for domestically produced OLED organic light-emitting materials is expected to continually widen. On another front, PSPI materials offer excellent performance and can simplify the photolithography process compared to traditional photoresists, making them core materials in OLED display manufacturing. Japanese and American companies dominate the global PSPI market. With the expanding demand from China's integrated circuit and OLED panel industries, the domestic PSPI market size is expected to grow continuously, and the volume shipment of domestic products is anticipated.
Based on the rapid development of downstream industries, continuous iteration of advanced technologies, and the overarching trend of domestic substitution, the firm believes the electronic materials sector continues to present significant development opportunities. For medium to long-term investment, the recommended themes are: 1. Benefiting from the overall recovery of the semiconductor market and growing demand for advanced materials from HPC and HBM manufacturing, the global semiconductor materials market maintains growth. Chinese companies are steadily building capacity and advancing R&D in various key materials, poised for gradual scale growth and technological iteration, which should boost the localization rate. Recommendations: Anji Microelectronics Technology, Jiangsu Yoke Technology, Hubei Dinglong, Konfoong Materials International, National Silicon Industry Group, Darbond Technology, Shandong Yanggu Huatai Chemical. Suggested to monitor: Red Avenue New Materials Group, Guangdong Huate Gas, Novoray Corporation. 2. With sustained growth in AI server demand, electronic resins like PPO, hydrocarbon resin, BMI, and PTFE are expected to become mainstream for high-speed CCLs. Amid supply-demand gaps, Chinese electronic glass fabric companies are accelerating domestic substitution. Recommendations: Jinan Shengquan Group, Sichuan Em Technology, Sinoma Science & Technology. Suggested to monitor: Grace Fabric Technology. 3. Driven by rapidly growing end-use demand for OLED, accelerated release of high-generation line capacity, promotion of stacked OLED technology, and ongoing material substitution, domestic demand for OLED organic light-emitting materials is expected to maintain high growth. Recommendations: Shaanxi Lighte Optoelectronics Material, Valiant. Suggested to monitor: Aolide, Ruilian New Materials.
The primary risks facing the rating include the risk of technological upgrades and iterations; the risk of downstream demand recovery falling short of expectations; and risks associated with global economic cyclical fluctuations, international trade frictions, and force majeure events.
Comments