Based on the rapid development of downstream industries, continuous iteration of advanced technologies, and the overarching trend of domestic substitution, the electronic materials sector is poised to sustain favorable development opportunities. The medium to long-term investment focus is recommended as follows: The global semiconductor materials market maintains a growth trajectory. In various key semiconductor materials, Chinese companies are steadily expanding production capacity and technological R&D, with expectations for gradual scale growth and technological iteration in the future, likely leading to a continuous increase in the localization rate of semiconductor materials. Demand for AI servers continues to grow, with electronic resins such as PPO, hydrocarbon resins, bismaleimide resins, and PTFE expected to become mainstream materials for high-speed copper-clad laminates in the AI server era. Under supply-demand gaps, Chinese electronic fabric enterprises are accelerating domestic substitution. With the rapid growth in demand for OLED end applications, accelerated release of high-generation line capacity, the promotion and application of stacked OLED technology, and the ongoing domestic substitution of related materials, domestic demand for OLED organic light-emitting materials is expected to maintain a high growth rate. The key views of BOC International are as follows:
Industry sentiment is driven by AI-fueled material demand growth, with domestic material enterprises accelerating their layouts. Global semiconductor sales reached $795.6 billion in 2025, a year-on-year increase of 26.2%, marking one of the strongest annual growth years in the industry's history. The explosion in demand for generative artificial intelligence and high-performance computing, the proliferation of storage technologies like HBM, the intelligent upgrade of automotive electronics, the large-scale deployment of IoT devices, and the advancement of 6G technology pre-research were the core drivers of industry growth in 2025. Benefiting from global wafer capacity expansion and increased demand for advanced processes driven by AI high-performance computing, the semiconductor materials market continues to expand. Global semiconductor materials market sales were $70.0 billion in 2025 and are expected to exceed $80.0 billion by 2027. In recent years, supported by national policies and market demand dividends, China's electronic materials industry has entered a stage of rapid development, with the domestic substitution process steadily advancing. The product technology levels and R&D capabilities of domestic electronic materials enterprises are continuously strengthening, transitioning from breakthroughs in single products to gradual improvement in industrial chain support, with overall industrial competitiveness steadily rising. As the trend towards localization and diversification in the global semiconductor supply chain deepens, the localization of China's electronic materials industry is expected to further advance, with industrial scale expanding rapidly. Electronic materials manufacturing enterprises are expected to achieve dual development opportunities in technological breakthroughs and market expansion by leveraging technological iteration and deep cultivation of application scenarios.
Electronic Materials Industry Performance Summary: 1) Total Operating Revenue: Steady scale growth, with semiconductor materials leading in growth rate. The combined total operating revenue of the 60 electronic material companies we tracked (including SW Semiconductor Materials and SW Electronic Chemicals) in 2025 was RMB 118.595 billion (year-on-year +13.47%), primarily benefiting from downstream wafer fab capacity release and the continuous advancement of domestic substitution. By sub-sector, the combined revenue of 25 SW Semiconductor Materials companies in 2025 was RMB 51.290 billion (year-on-year +15.40%), a growth rate 1.93 percentage points higher than the overall electronic materials industry, with industry revenue concentrated in leading enterprises; the combined revenue of 35 SW Electronic Chemicals companies was RMB 67.304 billion, a year-on-year increase of 12.05%, with a more balanced industry scale distribution. 2) Net Profit Attributable to Parent Company: Significant structural differentiation, with high-end electronic chemicals as the profit pillar. The combined net profit attributable to the parent company for the 60 tracked companies in 2025 was RMB 7.082 billion (year-on-year +12.17%), with 49 companies profitable and 11 companies incurring losses (combined loss of RMB 3.124 billion). Losses were concentrated in the large silicon wafer segment of the semiconductor materials industry, while high-margin products such as polishing materials and high-end wet electronic chemicals contributed significantly to the net profit of the SW Electronic Chemicals sector. 3) Gross and Net Profit Margins: Electronic chemicals lead in profitability levels. The overall gross/net profit margins for the 60 tracked companies in 2025 were 24.53%/5.96%, up 0.04/0.04 percentage points year-on-year respectively, with differentiation among segments: The overall gross/net profit margins for SW Semiconductor Materials in 2025 were 18.70%/1.53%, down 0.36/0.76 percentage points year-on-year respectively, mainly affected by the large silicon wafer category in the semiconductor materials industry; The overall gross/net profit margins for SW Electronic Chemicals were 28.97%/9.35%, up 0.47/0.74 percentage points year-on-year respectively, with companies in display materials and CMP polishing materials exhibiting higher gross margins. 4) R&D Expenses: Continued increase in R&D investment, with advanced process R&D as a key focus. The combined R&D expenses for the 60 tracked companies in 2025 were RMB 7.664 billion (year-on-year +13.38%), with an R&D expense ratio of 6.46%, basically matching the revenue growth rate. This indicates, to some extent, stable industry emphasis on technological breakthroughs without reducing investment due to short-term profit fluctuations. R&D investments were mostly concentrated in advanced process-related materials where domestic supply is lacking, such as 300mm silicon wafers, precursor materials, semiconductor packaging materials, and high-end wafer photoresists.
Electronic Materials Industry Development Trends: First, the iteration of advanced technologies promotes continuous expansion of material demand, and the domestic substitution process for high-end core materials continues to deepen. As logic and memory devices evolve towards advanced nodes, the explosion in demand for 3D integration and advanced packaging, and the widespread application of advanced process technologies lead to a significant increase in process steps, driving higher demand for wafer manufacturing and packaging materials. Currently, material localization has extended from basic categories to mid-to-high-end categories. Second, electronic materials enterprises are transitioning towards platform-based industrial chain support, actively expanding material application scenarios and seeking external growth. Domestic enterprises are transitioning from single products to industrial chain support, gradually increasing single-client value and strengthening cooperation ties with downstream players, with competitiveness steadily rising. Some enterprises participate in the integration of upstream and downstream resources within and outside China through strategic investments, M&A, and establishing commercial partnerships. Furthermore, electronic materials enterprises are actively extending their layouts into upstream raw materials and core equipment segments, promoting integrated industrial chain development. For example, Dinglong Co., Ltd. continues to deepen cooperation with downstream mainstream wafer fab customers, solidifying its core advantages in polishing pads, while expanding its product portfolio and market coverage for polishing fluids and cleaning fluids, and exploring application scenarios such as large silicon wafers, silicon carbide, and advanced packaging to enhance one-stop service capabilities. Third, the international market layout of electronic materials enterprises continues to deepen. Under the dual pressures of international technological barriers and trade frictions, domestic enterprises are accelerating overseas market expansion through measures such as overseas acquisitions, establishing overseas production bases, and setting up overseas R&D centers and sales outlets, exploring new industrial paradigms for internationalization. For example, the overseas operating entities of Jiangsu Yoke Technology Co.,Ltd. include Korea UP Chemical and Korea Emtech, with overseas revenue reaching RMB 2.123 billion in 2025, a year-on-year increase of 18.40%.
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