Bank of China International: Increased demand for AI computing power and accelerated domestic substitution accelerate the performance of leading materials
The Zhitong Finance App learned that Bank of China International released a research report saying that due to the continued boom in investment in AI infrastructure, high-performance computing and advanced storage, and further transmission of semiconductor material price increases to the reporting side, the revenue side of materials companies is expected to maintain a relatively rapid growth rate. Among them, the revenue side of materials companies is expected to maintain a relatively rapid growth rate. Among them, advanced processes and advanced packaging-related materials, and domestic substitution are expected to continue leading the trend. The bank believes that the electronic materials sector is expected to continue to usher in good development opportunities and maintain the industry's superior market rating.
Bank of China International's main views are as follows:
Industry sentiment
AI is driving a boom in semiconductors, the volume and price of materials have risen sharply, and domestic substitution has accelerated. WSTS expects the global semiconductor market to reach US$1.655 trillion (+108% YoY) and 26H1 to reach US$702 billion (+102% YoY) in 2026. Memory is the core of growth; global semiconductor material sales in 2025 are US$73.2 billion (+6.8% YoY), and are expected to reach US$130.2 billion in 2030. Since 2026, global semiconductor materials have set off a wave of price increases, and the scope of this round of price increases has spread from point to surface from key chemical raw materials to the entire manufacturing chain. The bank believes that the reasons for this round of semiconductor material price increases include the triple resonance of high demand, rising costs, and geographical conflicts. On the other hand, domestic substitution of electronic materials in China continues to advance.
Electronic materials industry 26H1 performance summary
1) Total operating income: Steady growth in scale, and volume and price resonance increase revenue. According to the bank's library of 69 brands in the electronic materials industry (see chart 9 for details), 26H1's total revenue was 78.321 billion yuan (+28.97% YoY), 26Q2 +31.99% YoY, +16.86% month-on-month, mainly due to the expansion of AI computing power and advanced storage demand leading to the release of production capacity in downstream fabs, an increase in share due to accelerated domestic substitution, and some materials entered the price increase channel.
2) Net profit to mother: 26Q2 profit improved and accelerated, and profit flexibility concentrated on the AI chain and domestic replacement leaders. 26H1 totaled 6.509 billion yuan (+24.11% YoY), 62 companies made profits, 7 lost money, 26Q2 +43.98% YoY and +52.00% YoY. The profit improvement slope was faster than revenue.
3) Gross margin and net profit margin: Structural differentiation is significant. 26H1's overall gross margin/net margin was 25.06%/8.43% (-0.70pct/-0.24pct year-on-year).
4) R&D expenses: High-end material categories continue to increase investment in development and verification. 26H1 totaled 4.805 billion yuan (+24.85% year over year), with a R&D cost rate of 6.14%. The overall R&D cost rate for the electronic materials industry has remained above 6% in the past three years. Leading companies such as Dinglong Co., Ltd. and Anji Technology have exceeded 15%. Continued investment has consolidated the technical foundation for breakthroughs in the localization of high-end materials.
5) Capital expenditure: The pace of expansion is steady, investment intensity is stabilizing, and leaders are increasing advanced production capacity and new product layout. 26H1 totaled 13.566 billion yuan (+4.84% year over year), accounting for 11.12% of net fixed assets at the end of the period (-1.38pct year on year). Investment intensity declined from a high in 2022, showing signs of stabilization at 23.88% over a 12-month period.
6) The performance of leading companies is growing faster, and their profit contribution and concentration are high. The 26 H1 revenue and net profit growth rate of the 24 companies selected by the bank with a market value of 30 billion yuan or more were higher than the 69 companies overall, and their share increased year-on-year; judging from the incremental contribution of 26H1 compared to 25H1, the 24 companies accounted for 55.38% and 67.03% of the increase in revenue and net profit to mother of 69 companies, respectively. The changes reported above are noteworthy: First, AI computing power resonates with domestic alternatives, and leading material performance is accelerating; second, revenue growth in asset-heavy sectors is high, and profits are still being repaired; third, new categories and global layout are speeding up.
Electronic materials industry second half of 2026 and future prospects
Demand side: The boom in AI and storage is expected to continue, and the demand for materials continues to expand due to the iteration of advanced technology. The global semiconductor market is expected to continue to grow at a high rate, and consumption of wafer manufacturing materials and packaging materials is expected to continue to increase. In the medium to long term, the iteration of advanced technology promotes the continuous expansion of material demand, and advanced manufacturing processes and advanced packaging are jointly driving the expansion of material usage and categories. For example, the number of ALD processes used in Yac Technology's precursor materials continues to rise — upgrading 2DNAND to multi-layer 3DNAND in the storage field has nearly doubled the ALD process steps, and the GAA node ALD process at 7nm and below in the logic field has further increased exponentially.
Price side: Some materials have entered a cycle of price increases, and profit flexibility is expected to gradually be released. The current round of semiconductor material price increases have covered many core categories such as silicon wafers, electronic specialty gases, targets, wet electronic chemicals, and packaging materials. The bank expects the relevant benefits brought about by the material price increase to gradually be reflected in the second half of 2026. In terms of profit elasticity, leading high-barrier categories such as electronic specialty gas and sputtering targets (such as CSIC, Jiang Feng Electronics, etc.) have high profit elasticity. Furthermore, the gross margin of companies on large silicon wafers (such as Shanghai Silicon Industry, Xi'an Yicai, etc.) is expected to recover month-on-month in the second half of 2026.
Market share: Localization of materials is advancing at an accelerated pace, and the platform-based and international layout continues to deepen. With this round of high downstream boom compounded by some fluctuations in overseas supply, China's semiconductor materials industry may usher in a critical window of acceleration in domestic substitution. For example, export control rules for dual-use items related to tungsten, gallium, germanium, and high-purity tantalum have been implemented, forcing overseas fabs to take the initiative to increase the proportion of domestic targets imported. In addition, electronic materials companies are supporting the transformation to a platform-based industrial chain and continuing to deepen their international layout. For example, Dinglong Co., Ltd. collaboratively develops polishing pads, polishing solutions, and high-end wafer photoresists, and expands new application scenarios such as large silicon wafers, SiC, and TSV for advanced packaging; Anji Technology continues to lay out the three major product platforms and upstream key raw materials for chemical mechanical polishing solutions, functional wet electronic chemicals, electroplating solutions and additives to enhance one-stop service capabilities; Jacques Technology covers semiconductor precursors, photoresist and supporting reagents, silicon powder, electronic special gas, etc., and the Korean subsidiary UPCHEM's third plant is expected to be fully invested by the end of 2026 Production, fourth The plant has begun planning.
Investment advice
Based on the rapid development of the downstream industry, continuous iteration of advanced technology, and domestic substitution, the bank believes that the field of electronic materials is expected to continue to usher in good development opportunities.
1. Benefiting from growing downstream demand and continuous technological progress, the global semiconductor materials market continues to expand, and demand for advanced materials rises rapidly. In terms of various key semiconductor materials, Chinese enterprises are steadily deploying production capacity and technology research and development, and competitiveness and production and sales scale are expected to continue to increase.
2. Some semiconductor materials and raw materials have benefited from price increases. The high downstream boom compounded by the slow expansion of production by overseas leaders. Affected by fluctuations in the supply of raw materials, etc., China's semiconductor materials industry may usher in a critical window period of acceleration of domestic substitution.
Recommended: Anji Technology, Dinglong Co., Ltd., Jiang Feng Electronics, Jacques Technology, Tongcheng New Materials, Shanghai Silicon Industry, Debon Technology, Yanggu Huatai; Recommended attention: China Porcelain Materials, Walter Gas, Lianrui New Materials, China Shipbuilding Special Gas, China Juxin, Xi'an Yicai, Guangzhou Steel Gas, Haohua Technology, etc.
The main risks faced by ratings
The risk of technological upgrading and iteration, the risk of downstream demand recovery falling short of expectations, the risk of cyclical fluctuations in the global economy, international trade friction and force majeure.