According to Zhitong Finance APP, BOCI released a research report stating that driven by the dual drivers of continued high prosperity in AI infrastructure, high-performance computing and advanced storage investment, as well as semiconductor material price increases further transmitting to the financial statements, combined with the gradual release of new production capacity and continuous advancement of localization, material enterprises' revenue is expected to maintain rapid growth. Among them, advanced process and advanced packaging related materials, as well as categories with faster domestic substitution materialization pace, are expected to continue leading the trend. The bank believes that the electronic materials sector is expected to continue welcoming development opportunities and maintains an overweight rating for the industry. BOCI's main viewpoints are as follows:
Industry Prosperity: AI Drives Semiconductor High Prosperity, Materials See Volume and Price Rise, Domestic Substitution Accelerates
WSTS estimates that the global semiconductor market size will reach $1.655 trillion in 2026 (YoY +108%), reaching $702 billion in 26H1 (YoY +102%), with memory as the core growth driver; global semiconductor material sales were $73.2 billion in 2025 (YoY +6.8%), and are expected to reach $130.2 billion by 2030. Since 2026, a wave of price increases has swept through global semiconductor materials, and the scope of this round of price increases has spread from key chemical raw materials to the entire manufacturing chain. The bank believes that the reasons for this round of semiconductor material price increases include the triple resonance of surging demand, rising costs and geopolitical conflicts. On the other hand, China's electronic materials domestic substitution continues to advance.
Electronic Materials Industry 26H1 Performance Summary
1) Total Operating Revenue: Scale grew steadily, volume-price resonance thickened revenue. According to the bank's electronic materials industry database of 69 targets (see main text Chart 9), 26H1 total revenue was 78.321 billion yuan (YoY +28.97%), 26Q2 YoY +31.99%, QoQ +16.86%, mainly due to AI computing power and advanced storage demand expansion driving downstream wafer fab capacity release, domestic substitution acceleration bringing share improvement, and some materials entering the price increase channel.
2) Net Profit Attributable to Parent: 26Q2 profit improvement accelerated, profit elasticity concentrated in AI chain and domestic substitution leaders. 26H1 total was 6.509 billion yuan (YoY +24.11%), 62 profitable, 7 loss-making. 26Q2 YoY +43.98%, QoQ +52.00%, with profit improvement slope faster than revenue.
3) Gross Profit Margin and Net Profit Margin: Structural divergence significant. 26H1 overall gross profit margin/net profit margin was 25.06%/8.43% (YoY -0.70pct/-0.24pct).
4) R&D Expenses: High-end material categories continued to increase development and verification investment. 26H1 total was 4.805 billion yuan (YoY +24.85%), R&D expense ratio 6.14%. Over the past three years, the overall R&D expense ratio of the electronic materials industry has remained above 6%, with leading enterprises such as Dinglong Co., Ltd. and Anji Technology having R&D expense ratios exceeding 15%, continuous investment laying a solid technical foundation for high-end material localization breakthroughs.
5) Capital Expenditure: Expansion pace steady, investment intensity stabilizing, leaders increasing advanced capacity and new product layout. 26H1 total was 13.566 billion yuan (YoY +4.84%), accounting for 11.12% of period-end net fixed assets (YoY -1.38pct). Investment intensity has fallen back from the 2022 peak, with the rolling 12-month ratio of 23.88% showing signs of stabilization.
6) Leading Enterprises' Performance Growth Faster, Profit Contribution and Concentration Higher. The 24 targets with market value above 30 billion yuan selected by the bank had 26H1 revenue and net profit attributable to parent growth rates higher than the overall 69 targets, and their proportion increased YoY; from the incremental contribution of 26H1 vs 25H1, the 24 targets accounted for 55.38% and 67.03% of the 69 targets' revenue and net profit attributable to parent increments, respectively. Notable changes in the above targets' interim reports: First, AI computing power and domestic substitution resonate, material leaders' earnings materialization accelerates; Second, heavy asset segments see high revenue growth, profitability still recovering; Third, new categories and global layout accelerate.
Electronic Materials Industry 2026 H2 and Future Outlook
Demand Side: AI and storage high prosperity expected to continue, advanced technology iteration promotes continuous expansion of material demand. The global semiconductor market is expected to continue maintaining high growth rates, and consumption of wafer manufacturing materials and packaging materials is expected to continue increasing. In the medium to long term, advanced technology iteration promotes continuous expansion of material demand, with advanced processes and advanced packaging jointly driving material usage and category expansion. For example, the number of ALD processes applied in Yoke Technology's precursor materials continues to rise — in the storage field, the upgrade from 2D NAND to multi-layer 3D NAND nearly doubles ALD process steps, and in the logic field, ALD processes at 7nm and below GAA nodes further multiply.
Price Side: Some materials entering price increase cycle, profit elasticity expected to gradually release. This round of semiconductor material price increases has covered multiple core categories including silicon wafers, electronic specialty gases, targets, wet electronic chemicals, packaging materials, etc. The bank expects that the related benefits brought by material price increases are expected to gradually materialize in 2026 H2. From the perspective of profit elasticity, leaders in high-barrier categories such as electronic specialty gases and sputtering targets (such as CSSC Specialty Gas, Jiangfeng Electronics, etc.) have greater profit elasticity. In addition, enterprises in the large silicon wafer track (such as National Silicon Industry Group, Xi'an Yicai, etc.) are expected to see their gross profit margins recover QoQ in 2026 H2.
Market Share: Material localization accelerates, platformization and internationalization layout continues to deepen. This round of downstream high prosperity combined with some overseas supply fluctuations, China's semiconductor material industry may usher in a critical window period for domestic substitution acceleration. For example, the implementation of export control rules on tungsten, gallium, germanium, and high-purity tantalum dual-use items has forced overseas wafer fabs to actively increase the proportion of domestic target introduction. In addition, electronic materials enterprises are transforming towards platform-based industrial chain supporting, and continuously deepening international layout. For example, Dinglong Co., Ltd. is developing polishing pads, polishing liquids, cleaning liquids and high-end wafer photoresist synergistically, and expanding into new application scenarios such as large silicon wafers, SiC, and TSV for advanced packaging; Anji Technology is continuously laying out around three major product platforms — chemical mechanical polishing liquids, functional wet electronic chemicals, electroplating liquids and additives — as well as upstream key raw materials, enhancing one-stop service capabilities; Yoke Technology covers semiconductor precursors, photoresist and supporting reagents, silica powder, electronic specialty gases, etc., and has established dual R&D departments in China and South Korea. Its Korean subsidiary UPCHEM's third factory is expected to fully commence production by the end of 2026, and the fourth factory has started planning.
Investment Recommendations
Based on the rapid development of downstream industries, continuous iteration of advanced technology, and the grand background of domestic substitution, the bank believes that the electronic materials sector is expected to continue welcoming development opportunities. 1. Benefiting from downstream demand growth and continuous technological progress, the global semiconductor material market size continues to expand, and demand for advanced materials rises rapidly. In various key semiconductor materials, Chinese enterprises are steadily laying out capacity and technology R&D, and their competitiveness and production-sales scale are expected to continue improving. 2. Some semiconductor materials and raw materials benefit from price increases. With downstream high prosperity combined with slower expansion speed of overseas leaders and impact from raw material supply fluctuations, China's semiconductor material industry may usher in a critical window period for domestic substitution acceleration. Recommendations: Anji Technology, Dinglong Co., Ltd., Jiangfeng Electronics, Yoke Technology, Tongcheng New Materials, National Silicon Industry Group, Debon Technology, Yanggu Huatai; Suggest paying attention to: Guoci Materials, Huate Gas, Lianrui New Materials, CSSC Specialty Gas, Zhongjuxin, Xi'an Yicai, Guanggang Gas, Haohua Technology, etc.
Main Risks Facing the Rating
Risks of technology upgrade iteration, risk of downstream demand recovery falling short of expectations, risks of global economic cyclical fluctuations, international trade frictions, and force majeure.
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