Opportunities and Challenges Faced by Electronic Chemical Materials Producers in a Dual Circulation Development Pattern
Click:5    DateTime:May.24,2021

Zheng Mingyue, China Center for Information Industry Development

The growth of domestic products provides a new business opportunity 

The development of Chinese electronic chemical materials industry has been accelerated by the new pattern of dual circulation. As a result, capacities of high-end electronic chemical materials such as organic light-emitting diodes (OLED), semiconductor materials and wafer materials, have been quickly transferred to China, which is in turn driving up the domestic new materials industry and accelerating the debottleneck of production technologies. 

1. OLED 

The application fields of OLED are being expanded, with more and more high-end domestic materials required. First, the penetration rate of OLED screens in small-size applications such as mobile phones and electronic watches has risen sharply. The installation rate of OLED mobile phones is estimated to exceed 50% in 2021. Secondly, as the large-scale OLED production technology is becoming more and more mature, the prices are falling and thus the product is expected to be widely used in the TV industry. Thirdly, emerging applications such as IT equipment and illumination are expected to become important growth points of OLED in the future.

OLED production increased in line with the mass production of domestic screen display from 2018 to 2020. Demand from downstream panel producers is strengthening, which will bring new opportunities for the development of domestic OLED.

2. Semiconductor materials

Driven by the increasing demand from 5G, vehicle electronics, Internet of Things, and artificial intelligence sectors, China's wafer manufacturing has stepped into a boom cycle. Year 2020 saw a spree of new and expanded capacities of wafer in China, and upstream materials producers consequently accelerated R&D of products in a hope to seize market shares at home and abroad by capacity expansion and technological breakthrough.

3. Wafer materials

The supply of chips, especially 8-inch wafer, has been tight since the second half of 2020. There are two main reasons for the shortage. First, in a boom stage, the global semiconductor sales recovered from February last year and gained a year-on-year growth of 7% in November. Secondly, the growth of demand is higher than that of capacity, leaving the capacity of wafer materials to be in short supply continuously.

IC industry consists of chip design, manufacturing, packaging and testing. A big number of electronic chemical materials is needed in the latter three segments. Among the materials, silicon wafer materials accounts for 29%, mask 14%, electron gas 14%, photoresist supporting reagent 8%, CMP materials 7%, chemical reagent 6%, photoresist 6% and target materials 3%.

(1) Low-end products dominate electronic chemical materials market; high-end products show little competitive edge 

According to the capacity of electronic chemical materials, most of the materials rely on importing. The global market shares of silicon wafers are mainly dominated by Japanese, Korean, German and American manufacturers, while in China, some silicon wafer producers are only able to manufacture silicon waters at 8 inch or less. However, 12-inch silicon wafers are being put into mass production today.

The global market shares of photoresist are mostly occupied by JSR, Sumitomo Chemical, and TOK. Chinese producers can only make some low-end products, particularly PCB photoresist, while the self-supply rate of semiconductor photoresist and LCD photoresist is low.

The wafer-based target materials – the highest-end target material market is monopolized by Japan JX, TOSOH, Honeywell and Praxair, whose aggregated market shares account for 90% of the global total. The sputtering target material market for optical components is monopolized by Umicore of Belgium, Merck of Germany, Canon of Japan; the sputtering target market for panel display is dominated by Austria-based PLANSEE, Germany-based H.C.Starck and Heraeus, as well as Japan-based ULVAC and JX. Chinese target materials producers mainly make low-end products and they are less competitive in the high-end market. However, the production of high-purity sputtering target materials has made great progress in China in recent years and some of the grades have been put into mass production. 

The global polishing solution market is monopolized by American and Japanese enterprises. Chinese new materials producers, led by ANJI TECHNOLOGY, can use domestic goods to replace imported ones, but their shares in the global market are only at 2%. Dow Chemical is the worldwide biggest polishing pad producer. The supply of homemade polishing pad products in China is short.

(2) The supply of products are relatively single, unable to cover all the needs

Specialty gas materials are the most representative grade with the feature. Germany-based Linde Group, Air Liquide, Japan’s Showa Denko and NIPPON SANSO CORPORATION, and UK’s BOC are major specialty gas materials producers. In China, supply of the products is relatively single, which cannot fully cover all the subdivisions, and the gas purity is insufficient, so the products lose competitive edge in the high-end fields such as integrated circuits, display panels, photovoltaic energy as well as optical fiber and cable.

(3) Severe shortage of core intellectual property rights

Electronic chemical materials originated in the 1960s, and have constantly been refined from high-purity chemical reagent products and applied to the IC industry. China's electronic chemical materials started late, so there is a big gap with advanced international producers in technology and capacity.

The production and R&D of major foreign producers’ high-end electronic chemical materials are highly confidential, so Chinese R&D institutions and enterprises have to do R & D independently, which will take long time before possessing core technologies and patents, thereby restricting the industrial development. 

Future development

In the Report on the work of the government 2021, Premier Li Keqiang clearly proposed to establish a national laboratory system in a bid to thoroughly solve the problems including huge investments in R&D of electronic chemical materials, difficulty in final test and long industrialization time, and to set up a complete independent innovation system of electronic chemical materials.

Electronic chemical materials industry is a mix of chemical industry and electronic manufacturing industry, and the materials are an indispensable key material in the production of IC. However, the industry is still administrated in compliance with the chemical industry, which seriously restricts the industrial development. The government should grasp the development direction of the industry and make reasonable industrial layout by setting up a special “green channel” for the project approval, capacity control and schedule management of electronic chemical materials. In addition, the government should adhere to independent innovation, and guide the orderly expansion of investments in the electronic and chemical materials industry while avoiding blind expansion at the low-end.