In 2025, China's chip self-sufficiency rate will reach 70%!
Mainland China is the world's largest chip market, with a market size of several trillion yuan, accounting for about one-third of the global market. However, the self-sufficiency rate of domestic chips has been hovering around 30%.
According to the plan announced by the relevant parties, in 2025, the self-sufficiency rate of mainland chips will reach 70%, which means that domestic chip manufacturers will usher in a domestic alternative market of trillions of yuan.
In the chip production process, photoresist is a key consumable in the lithography process, and its quality and performance are directly related to the yield rate of electronic devices and the reliability of device performance.
From the perspective of technological progress, photoresist is the most likely to take the lead in realizing domestic substitution, and enterprises such as Tongcheng New Materials, Nanda Optoelectronics, Chinachem Technology, and Shanghai Xinyang have gradually achieved technological breakthroughs.
Among them, Tongcheng New Materials has begun large-scale mass production in the most advanced ArF photoresist.
Next, we will use the classic industry analysis model - Porter's five forces to analyze the photoresist industry and Tongcheng new materials.
The ability to substitute for substitutes
Photoresist, essentially a chemical material, is mainly composed of photosensitive resin, sensitizer and solvent, accounting for about 6% of chip consumables.
There are no alternatives to photoresist for the time being, but the improvement of chip performance is constantly driving the evolution of photoresist technology.
According to the different exposure wavelengths, the photoresist that is more widely used in the market can be divided into five types: G line, I line, KrF, ArF and EUV, the shorter the wavelength of the photoresist, the higher the processing resolution, and the wavelength of the photoresist is also shortening in order to meet the requirements of the continuous reduction of the line width of the integrated circuit.
The mainstream process of g/i line photoresist is 0.35-0.5μm in the manufacturing process, corresponding to the light source with a wavelength of 365nm.
When the process is developed to below 0.35μm, the g/i line photoresist can no longer meet the needs of the process process, so the KrF photoresist suitable for the 248 nm wavelength light source and the ArF photoresist for the 193 nm wavelength light source appeared, both of which are deep ultraviolet photoresists.
EUV (extreme ultraviolet light) is the most advanced photoresist technology at present, suitable for ultraviolet light with a wavelength of 13.5nm, and can be used in advanced processes below 7nm.
The competitiveness of competitors in the industry
Judging from the current competitive situation, the global photoresist market is mainly monopolized by manufacturers such as JSR, Tokyo Oika, DuPont, Shin-Etsu Chemical, Sumitomo and Fujifilm, especially in the high-end KrF and ArF fields of semiconductor photoresists, with higher market concentration.
Based on policy support, Japanese companies have increased their efforts to achieve coordinated development of upstream and downstream, so as to firmly occupy a leading position, and occupy at least 60% of the semiconductor photoresist market.
In China, there are many major competitors in the semiconductor photoresist market, but they are all in their infancy in ArF adhesive, and EUV photoresist is still in the theoretical research stage.
In terms of products, in terms of G/I line photoresists, Beijing Kehua, Xuzhou Bokang, and Suzhou Ruihong have achieved large-scale mass production, and have become the leading semiconductor companies in China, with a gradual increase in market share.
In terms of KrF photoresists, Beijing Kehua and Xuzhou Bokang have made rapid progress, and many varieties have been sold in 2023; In addition, Suzhou Ruihong and Shanghai Xinyang have also achieved breakthroughs in mass production.
In terms of ArF photoresist, Nanda Optoelectronics launched the first domestic ArF photoresist that passed customer verification in China and achieved a small amount of sales, while Chinachem Technology and Shanghai Xinyang also have related products for testing and introduction.
Tongcheng New Materials announced on its official Weibo on April 30 that some ArF/ArFi photoresist products have passed the verification of domestic chip factories, obtained large-scale mass production orders, and have begun to be supplied in batches.
As domestic manufacturers KrF and ArF photoresists enter the mass production stage, domestic high-end photoresists will gradually be replaced by domestic ones, and the performance of related companies will also usher in a round of release.
The ability of potential competitors to enter
As we mentioned above, photoresist is actually a chemical material, mainly resin-based. But this is only a raw material, and it does not mean that as long as a chemical company can do this job.
There are three main technical barriers to photoresist, formulation technology, quality control technology and raw material technology.
First and foremost, formulation technology is the cornerstone of photoresist functionality. It is like the "soul" of photoresist, which determines the performance of photoresist in specific application scenarios. Only by mastering advanced formulation technology can we ensure that photoresist can play its due role in high-precision fields such as microelectronics manufacturing.
Secondly, quality control technology is the guardian of the stable performance of photoresists. Through strict monitoring and adjustment of all aspects of the production process, we ensure that each batch of photoresist can meet the preset performance indicators, so as to provide customers with stable and reliable products.
Furthermore, the quality of the raw material technology directly determines the quality of the photoresist. High-quality raw materials can not only improve the performance of photoresists, but also extend their service life and reduce production costs. Therefore, the in-depth research and mastery of raw material technology is an important guarantee for the development of photoresist technology.
The production process of photoresist is complex and the technical barriers are high, which requires enterprises to have long-term technical accumulation, high-quality R&D personnel, rich industry experience and good communication skills with customers. Together, these factors constitute an insurmountable obstacle for new entrants in the short term.
The bargaining power of photoresist companies on upstream and downstream
The photoresist industry chain can be divided into three links: upstream raw materials, midstream manufacturing and downstream applications.
In the upstream raw material sector, the industry represents companies such as DowDuPont, Fujifilm, BASF, Qiangli New Materials, and Sumitomo, of which 49% are located in Japan.
Raw materials are indispensable, and technology is in the hands of foreign manufacturers, so the bargaining power is weak.
For downstream chip manufacturing enterprises, domestic photoresist is still in short supply, there is a large space for domestic substitution, and high-end photoresist has been overcome by domestic manufacturers, so the bargaining power is relatively strong.
From this link, Tongcheng New Materials is the most potential one in China.
What are the advantages of Tongcheng New Materials?
1. Master the core raw materials
Tongcheng New Materials is mainly engaged in the production of special materials for tires, and its core product is phenolic resin, which is also a downstream processing product of resin.
Therefore, in the research of resin technology, the company itself has a deep accumulation, through continuous research and development, photoresist resin has been mastered by itself, and the upstream supply chain can be shared, but also greatly reduce production costs.
2. Strong technical strength
As a leading semiconductor photoresist enterprise in China, the company's G-line and I-line photoresist products have been widely used in domestic integrated circuit production lines, with more than 20 kinds of KrF photoresist products, which are stably supplied to domestic manufacturers such as SMIC, Huahong Group, Yangtze River Storage, and Changxin Storage.
In addition, the company's ArF photoresist development has achieved mass production, and its performance is benchmarked against international manufacturers.
Finally, to sum up, the technological breakthrough of high-end photoresist will drive a new round of domestic substitution, with the increasing demand for domestic chips, this part of the market space is very optimistic.
Tongcheng New Materials is the first to realize the mass production of high-end photoresists, and at the same time, it is deeply bound to well-known domestic chip companies, which will be extremely profitable in the context of domestic substitution.
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Source: Flying Whale Investment Research