Targets are mainly used in flat panel displays, semiconductors, photovoltaic cells, recording media and other fields. From the demand, the target is the core raw material for preparing functional films. It is mainly used in the fields of panel, semiconductor, photovoltaic and magnetic recording media to realize the functions of conduction or barrier. In 2020, the global target market scale was about 18.8 billion US dollars, and the target market scale in China was 4.6 billion US dollars. In terms of supply, the four Japanese and American giants occupy 80% of the target market. Chinese sputtering targets are mainly used in medium and low-end products, and there is a strong demand for domestic substitutes.
Industrial transfer accelerates domestic substitution of target materials, and technological innovation promotes the demand for copper and tantalum. The semiconductor chip industry has the highest requirements for the composition, structure and performance of the target, and the purity is usually 5n5 or even 6N or more. With the accelerated transfer of the semiconductor industry to China, it is expected that the scale of China’s semiconductor target market will reach about US $670 million in 25 years, and the growth rate of China’s target demand may reach 9.2% in 21-25 years. At the same time, with the technological innovation of downstream chips, sputtering targets are gradually developing to large-size, multi variety and high-purity. Among them, the demand growth prospect of copper and tantalum targets is good. In terms of supply, Japanese and American manufacturers account for about 90%, but Youyan and other enterprises have made breakthroughs in domestic copper, aluminum and other targets, and the production capacity is also expanding. It is expected that more than 100000 pieces of production capacity will be added to China’s semiconductor targets in the next 2-3 years.
Domestic substitution + product iteration, China’s demand for display panel targets is expected to continue at a high speed. FDP targets can be divided into sputtering targets and evaporation targets according to the process. The sputtering targets are mainly Cu, Al, Mo and igzo. The purity and technical requirements are second only to semiconductors, generally more than 4N or even 5N. However, higher requirements are put forward for the welding bonding rate and flatness of the target. Benefiting from the rising demand for display panels and the improvement of domestic substitution of Chinese display panels, it is expected that the scale of China’s FDP target market will reach US $5 billion in 25 years and the CAGR will be 18.9% in 21-25 years. In addition, we also expect that the molybdenum target and low resistance copper target for OLED have broad growth space. In terms of supply, China’s display panel targets are highly dependent on imports, and Japanese enterprises still dominate the Chinese market. China is dominated by Longhua Technology Group(Luoyang)Co.Ltd(300263) , Konfoong Materials International Co.Ltd(300666) , Fujian Acetron New Materials Co.Ltd(300706) , pilot thin materials, Grinm Advanced Materials Co.Ltd(600206) and domestic substitution is gradually accelerating.
Hit mass production starts in the first year, and the target may meet the growth opportunity period. Photovoltaic targets are mainly thin-film cells and hit photovoltaic cells, with a purity of more than 4N. With the development of hit batteries and thin-film batteries, it is estimated that the market scale in China will be close to US $3.8 billion in 25 years, and the CAGR in 21-25 years will be 56.1%. In terms of supply, due to the small scale of China’s thin film battery and hit battery market, there are few relevant target enterprises, and there are many initial stages, among which the production capacity of leading thin materials and Konfoong Materials International Co.Ltd(300666) etc. is relatively large. In addition, Longhua Technology Group(Luoyang)Co.Ltd(300263) has also begun to lay out relevant industry leaders.
The trend is difficult to reverse, and the target of magnetic recording is expected to gradually turn to the target of memory chip. Magnetic recording targets are mostly made by sputtering. Common materials are cobalt (3n) / nickel / ferroalloy / chromium / tellurium, selenium (4N) / rare earth migration metal (3n), mainly including chromium target, nickel target and cobalt target. China’s magnetic recording target market is dominated by overseas supply, and the number and capacity of Chinese enterprises producing magnetic recording targets are very limited. As the localization level of mechanical hard disk in China is very low, and the R & D focus of recording media is mainly on semiconductor storage, we expect that the growth space of traditional mechanical keyboard is limited, and the target of magnetic recording is expected to gradually shift to the target of memory chip. The demand for tungsten, titanium, copper and tantalum targets in 3dnand field increases greatly.
Investment proposal and investment object
It is suggested to focus on two main lines: first, focus on the upstream enterprises of target materials, Ningxia Orient Tantalum Industry Co.Ltd(000962) ( Ningxia Orient Tantalum Industry Co.Ltd(000962) , not rated), high-purity aluminum purification enterprises Tianshan Aluminum Group Co.Ltd(002532) ( Tianshan Aluminum Group Co.Ltd(002532) , not rated), Xinjiang Joinworld Co.Ltd(600888) ( Xinjiang Joinworld Co.Ltd(600888) , not rated), high-purity / molybdenum purification enterprises Jinduicheng Molybdenum Co.Ltd(601958) ( Jinduicheng Molybdenum Co.Ltd(601958) , not rated), high-purity tungsten purification enterprises Chongyi Zhangyuan Tungsten Co.Ltd(002378) ( Chongyi Zhangyuan Tungsten Co.Ltd(002378) , not rated), etc.
Second, focus on target manufacturers, including Grinm Advanced Materials Co.Ltd(600206) ( Grinm Advanced Materials Co.Ltd(600206) , not rated), Konfoong Materials International Co.Ltd(300666) ( Konfoong Materials International Co.Ltd(300666) , not rated), Longhua Technology Group(Luoyang)Co.Ltd(300263) ( Longhua Technology Group(Luoyang)Co.Ltd(300263) , not rated), which have made breakthroughs in target manufacturing process and raw material purification process and have continuously expanded production capacity.
Risk tips
The prosperity of the target downstream industry is less than expected, the production capacity construction or release of the target manufacturer is less than expected, and the domestic target raw materials cannot meet the target requirements. The market scale is predicted according to various assumptions, and the relevant assumptions may not meet the expectations
