Key investment points
Photoresist is the core material of semiconductor manufacturing, with high industry barriers: photoresist is the core material of lithography technology in semiconductor manufacturing process. Its quality directly determines the performance and yield of integrated circuits, and it is also the key material to drive the realization of Moore’s law. Photoresists can be divided into three categories according to their application fields: PCB, panel and photoresist for semiconductor. Among them, the technical threshold of semiconductor photoresist is the highest, and the industrial barriers are high due to patent technology, raw materials, equipment verification and customer certification.
Japan dominates the world and the market is highly monopolized: the expansion of global wafer factories drives the rapid growth of industry demand. The global semiconductor photoresist market is about US $1.9 billion in 2021. In 2020, China’s semiconductor photoresist market will be about 350 million US dollars. With the continuous improvement of China’s foundry capacity, it is expected to reach 10 billion yuan in 2025. In terms of competition pattern, the market has been highly monopolized by foreign countries for a long time. Especially in the field of medium and high-end photoresist, Japanese enterprises dominate.
Domestic substitution has become a long-term trend, and Chinese manufacturers follow the wind and catch up with the moon: at present, China’s semiconductor photoresist is mainly low-end products, and the technical level is far from that of foreign countries. However, under the background of a number of national policy support and large fund injection, domestic substitution will become a long-term trend in the future. Downstream enterprises in China’s industrial chain have gradually realized the importance of localization of core materials. Chinese manufacturers are also actively developing medium and high-end products, accelerating the introduction of customers and products, expanding relevant production capacity, and forging ahead in exploration, so as to seize the opportunity of localization. At present, a few enterprises have begun to emerge and achieve a breakthrough from 0 to 1.
Investment suggestion: we can pay attention to the enterprises with long-standing technology accumulation, mass production of products and integrated layout of upstream and downstream of the industrial chain. We suggest paying attention to Red Avenue New Materials Group Co.Ltd(603650) that has acquired Beijing Kehua and Beixu electronics; You can also pay attention to Crystal Clear Electronic Material Co.Ltd(300655) with a wide range of product layout in the field of microelectronics and chemicals.
Risk tips: 1) macroeconomic downside risk; 2) Market competition intensifies risks; 3) Risk of raw material and equipment supply; 4) Domestic substitution is less than expected risk.
