Open Source Securities: Demand Expansion + Process Upgrade + Domestic Substitution, Wet Electronic Chemicals Entering a Fast Track of Simultaneous Growth in Volume and Price

K-Growth Securities released a research report stating that as the wafer manufacturing capacity continues to increase, the semiconductor materials industry is expected to benefit continuously. The expansion in multiple fields combined with technology upgrades is propelling the wet electronic chemical industry into a rapid growth phase with rising volume and prices. The firm believes that domestic substitution is gradually deepening from general products to high-end materials, and during this critical window, stable supply capabilities may determine mid-term market share. They are optimistic about platform-type materials manufacturers and leading players in niche segments. Key points from K-Growth Securities are as follows: Robust manufacturing sector leads the semiconductor materials industry into a new upward cycle The era of AI brings new development opportunities for the semiconductor materials market. AI drives the demand release in advanced computing/storage sectors, resulting in high utilization rates at the semiconductor manufacturing end, signaling the beginning of an upward cycle in capacity expansion. As the upstream of the industry, semiconductor materials are also experiencing high prosperity during this growth cycle. The global semiconductor materials market size is projected to grow from $65 billion in 2023 to $73.2 billion in 2025, with the wafer manufacturing materials market size increasing from $41.5 billion to $45.8 billion, and further anticipated to rise to $48.9 billion in 2026. In Q1 2026, global silicon wafer shipments are expected to see a year-on-year increase of 13%, making it the seventh consecutive quarter of year-on-year growth in shipments. The firm believes that with the continuous rise in wafer manufacturing capacity, the semiconductor materials industry is poised to benefit continually. Wet electronic chemicals: Expansion across multiple fields combined with process upgrades drives the industry into a rapid growth phase with rising volume and prices Wet electronic chemicals are divided by purpose into general and functional categories; by scenario, they include integrated circuits, display panels, and photovoltaics. The photovoltaic sector, benefiting from its massive production capacity, accounts for a significant share of demand, while the integrated circuit segment represents about 70% of the global market size, primarily due to the stricter requirements for purity, cleanliness, and stability associated with high-grade products, thus carrying higher value. In the integrated circuit field: Process upgrades lead to increased material consumption per unit and product high-endization. Apart from the direct increase in demand driven by manufacturing expansion, the more critical factor is that new wafer manufacturing capacities are heavily concentrated in advanced processes and high-end chip areas like 3D NAND, resulting in an increase in graphical process steps, thus driving the corresponding processes of cleaning, etching, and CMP, raising the average material consumption per unit. Meanwhile, the trend towards high-end products also drives price increases. In the display panel and photovoltaic fields: The recovery of industry utilization rates and warming downstream demand in the display panel sector steadily boosts the demand for wet electronic chemicals. In the photovoltaic sector, although the requirements for purity and other indicators in wet electronic chemicals are relatively lower, the large shipment volumes of photovoltaic cells and the highly repetitive nature of the processing steps enable significant economies of scale in overall usage. Japanese and European/American manufacturers dominate core categories, and the "de-Japanization" expectation accelerates domestic manufacturers' breakthrough Overseas manufacturers control the high-end segments: Japanese and European/American companies hold approximately 27% and 30% of the global market share for wet electronic chemicals used in integrated circuits, respectively. Japanese material clusters have notable advantages: They have deep expertise in areas such as high-purity fluorides, ultra-pure cleaning materials, and CMP materials, with photolithography chemicals and supporting materials also being strongholds. Due to the influence of geopolitical tensions, the supply chain risks for upstream key materials have reached unprecedented levels. The heightened sentiment for "de-Japanization" may prompt domestic mainstream wafer fabs and packaging firms to accelerate the validation and scaling up of local suppliers significantly. Domestic wet electronic chemical manufacturers are rapidly entering the golden window for "comprehensive substitution." Risk Reminder: Industrial prosperity may not meet expectations; domestic substitution may fall short of expectations; risks from fluctuations in raw material prices, etc.