Recently, the relationship between China and Japan has become tense due to erroneous remarks made by Japanese Prime Minister Sanae Takaichi regarding Taiwan. On November 14, Wu Jianghao, the Chinese Ambassador to Japan, summoned the Japanese Deputy Foreign Minister to express serious concerns and strong protests regarding Japan’s erroneous statements and actions.
This diplomatic incident hides a severe industrial reality: Japanese companies hold a 52% share of the global semiconductor materials market, with 14 out of 19 key materials being the global leaders in market share. The combination of geopolitical risks and the need for industrial security makes the domestic substitution of semiconductor materials an urgent task.
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01 Industry Status: A Fragile Balance Dominated by Japan
The dominant position of Japanese companies in the semiconductor materials sector is well-deserved.
In the highest-end ArF and EUV photoresist fields, Japanese companies (JSR, Tokyo Ohka, Shin-Etsu Chemical, Fujifilm) hold over 90% market share.
In the large wafer segment, Japan’s Shin-Etsu Chemical and SUMCO are the top two silicon wafer suppliers globally, together with three other companies monopolizing over 90% of the market.
In the high-purity hydrogen fluoride segment, Japanese companies also play a significant role, with Stella Chemifa and Morita being major industry participants.
This supply chain structure, which relies heavily on Japanese suppliers, poses significant risks. In 2019, Japan cut off hydrogen fluoride supplies to South Korea, leading to a production crisis for giants like Samsung, serving as a stark reminder of the extreme importance of supply chain autonomy.
02 Domestic Substitution: From Layered Breakthroughs to Comprehensive Assaults
Domestic production of semiconductor materials has made some progress but exhibits characteristics of layered breakthroughs.
Materials such as 8-inch silicon wafers, polishing liquids, and lead frames have a domestic production rate exceeding 30%; however, in more challenging areas like 12-inch silicon wafers, photoresists, electronic gases, and wet electronic chemicals, the domestic production rate is still below 20%.
Specifically in subfields:
In photoresists, semiconductor photoresists represent the most advanced level of photoresist technology. Domestic company Nanda Optoelectronics has achieved mass production of ArF photoresists, supplying SMIC and Huahong Semiconductor.
In high-purity hydrogen fluoride, Dofluor has produced products with 99.999% purity, priced 30% lower than similar Japanese products, and has received bulk orders from Yangtze Memory Technologies.
In the silicon wafer sector, 12-inch large silicon wafers have become mainstream, but the global market is still dominated by Japanese companies, which hold over 60%, while domestic companies like Shanghai Silicon Industry are accelerating their market entry.
03 Overview of Core Industry Concept Stocks
Photoresists:
· Nanda Optoelectronics (300346): ArF photoresists have achieved mass production, directly supplying SMIC and Huahong Semiconductor.
· Tongcheng New Materials (603650): KrF photoresists are being supplied in bulk, with ArF products under development.
· Jingrui Electric Materials: A photoresist company that continues to make breakthroughs in the semiconductor photoresist field.
Electronic Special Gases and Wet Electronic Chemicals:
· Huate Gas: A leading company in electronic special gases, with products widely used in semiconductor manufacturing processes.
· Jianghua Micro: A wet electronic chemicals company, with products including cleaning solutions and etching liquids.
· Dofluor (002407): High-purity hydrogen fluoride with a purity of 99.999%, priced 30% lower than Japanese products.
Silicon Wafers and Target Materials:
· Shanghai Silicon Industry: A leading domestic silicon wafer company focused on the research and industrialization of 12-inch silicon wafers.
· Jiangfeng Electronics (300666): The world’s leading supplier of high-purity target materials, supplying TSMC and Samsung.
CMP Materials:
· Anji Technology: A domestic leader in CMP polishing liquids, with products covering advanced processes of 14nm and above.
· Dinglong Co., Ltd.: A CMP materials company with a presence in polishing pads and other areas.
Comprehensive and Others:
· Wanye Enterprises (600641): Equipment and materials integrated R&D, collaborating with SMIC and Yangtze Memory Technologies.
· Zhongjuxin (688549): Breaking through barriers in the storage and transportation of high-purity hydrogen fluoride, entering the TSMC supply chain.
· Yake Technology: A leading company in precursor materials.
04 Investment Logic: Historical Opportunities Driven by Triple Forces
Strong policy support. The third phase of the National Integrated Circuit Industry Investment Fund has officially launched, with a fundraising scale reaching 300 billion yuan, of which 40% will be invested in the semiconductor materials sector.
Downstream demand pull. The explosive demand for AI computing power is rapidly driving growth in the advanced packaging materials market. The demand for high-performance semiconductor materials is surging in fields such as new energy vehicles and 5G communications.
Broad space for domestic substitution. Currently, the overall domestic production rate of semiconductor materials is about 15%, indicating a vast potential for import substitution. Particularly in areas like photoresists, electronic special gases, and wet electronic chemicals, there is not only significant market space but also concerns regarding supply chain security.
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The geopolitical turmoil once again reminds us that core technologies cannot be bought, and industrial chain security must be in our own hands. With domestic companies continuously breaking through in core technologies and the demand driven by the expansion of downstream wafer fab capacities, the semiconductor materials sector is expected to see the emergence of a number of internationally competitive Chinese enterprises.
(This article is for reference only and does not constitute any investment advice. The market has risks, and investment should be cautious.)
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