Electronic Chemicals: Tackling Core Technical Barriers and Improving the Comprehensive Strength of Enterprises
Click:0    DateTime:Jun.14,2021

Zhai Weipei

In 1990, the scale of China's electronic chemicals industry was only RMB2 billion, by 2011 it had exceeded RMB30 billion and the scale of the entire industry in 2020 reached RMB 80 billion, with an average annual compound growth rate of more than 12%.

Wet electronic chemical industry

In 2019, the overall market size of China's wet electronic chemicals exceeded RMB 10 billion, and the demand for the three major items, namely semiconductors, display panels and solar cells exceeded 1.1 million tons.

The semiconductor wet electronic chemical market shares are mainly controlled by companies in Europe, America, Japan and South Korea, including BASF, Ashland Chemical, Arch Chemical, Kanto Chemical, Mitsubishi Chemical, Kyoto Chemical, Sumitomo Chemical Wako Pure Pharmaceutical Industry, Taiwan Xinlin Technology, South Korea Dongwoo Fine Chemicals, etc., with them taking more than 85% of the global market share.

There is still a big gap between the domestic wet electronic chemicals industry and their foreign counterparts. For example, in the semiconductor and flat panel display fields that require high purity levels of electronic chemicals, the domestic-funded enterprises’ market shares in China are only about 25%.

Electronic gas industry 

In 2016, the domestic electronic special gas demand reached RMB 6 billion, of which the special gas demand for integrated circuits was RMB 2.5 billion, and the special gas demand for flat panel displays was RMB 2.2 billion. In 2020, the special gas industry will be about RMB 10 billion in scale.

There are high technical barriers for the production, separation, purification and transportation of electronic special gases. Five major international giants, including Air Products & Chemicals, Praxair, Linde Group, Air Liquide, and Dayo Nippon Acid Co., Ltd., account for more than 90% of the global market share.

At present, the Chinese special gas market is mainly monopolized by major international gas companies. There are about 20 large-scale domestic enterprises with an average annual revenue in the range of RMB tens of millions to RMB 500 million. Most companies were established within the past 10 years.

Polishing material industry

The scale of China's polishing materials market in 2020 was RMB 3.14 billion, and the compound annual growth rate is expected to be 7% from 2019 to 2023.

The main suppliers of chip polishing liquid in the world are Cabot, DuPont, Fujimi, ACE, etc. The main supplier of CMP polishing pads is Dow. Domestic suppliers include Anji Technology and Dinglong.

Photoresist industry

As the downstream applications such as power semiconductors, sensors, and memory expand, the photoresist market will continue to expand in the future. It is estimated that in 2025, the scale of the domestic photoresist market will be approximately RMB 9 billion.

The core technology of photoresist is monopolized by Japanese and American companies, like JSR Co., Ltd., Shin-Etsu Chemical, Tokyo Ohka Kogyo, Fujifilm, DuPont, Dow Chemical, etc.

Domestic companies are Nanda Optoelectronics (Kehua), Suzhou Jingrun and Feikai Materials.

Problems in China's electronic chemical industry

1. Disorderly competition between low-end products & low market shares of high-end products

Among the main downstream industries of electronic chemicals, the photovoltaic industry has the lowest product quality requirements. At present, localization has basically been achieved in China, and there is disorderly competition among enterprises. However, the electronic chemicals used in the semiconductor industry have a low market share due to high technical thresholds and customers’ certification barriers. In the field of 12-inch wafers with advanced manufacturing processes, the domestic electronic chemicals’ market shares are less than 10%.

2. Local companies are small in scale with only a single product category

China's electronic chemical companies are small in scale with a single product category, and the leading ones’ annual sales are only several hundred million Renminbi. Companies’ available funds for research and development are limited, leading to a slow progress in product diversification.

3. Without core technology, the overall investment cost is high

Most domestic electronic chemical companies have invested in the introduction of complete sets of equipment and personnel from the United States, Japan, South Korea or Taiwan. The investment in the factory and the management and operation is high, and there is no advantage over those foreign funded competitors.

4. Insufficient professionals and lack of continuous R&D investment

Due to the late start of the domestic semiconductor industry, there is a shortage of local professionals. Along with the continuous innovation and upgrading of downstream production processes, the requirements for the types and quality of electronic chemicals will also upgrade. This requires domestic electronic chemical producers to continuously increase R&D investment in accordance with the needs of downstream customers.

5. The level of environmental protection and safety management needs to be further improved

Many products in the electronic chemical industry belong to the category of hazardous chemicals, especially in the field of electronic special gas, where lies a greater production safety risk. Therefore, domestic enterprises need to establish a complete environmental protection and safety management system and strictly implement such system.

6. The supporting system of the industrial chain is weak

At present, many production equipment and accessories of domestic electronic chemical manufacturers, such as high-end filter membranes, tank trucks, barrels, core pump valves and testing instruments, are still monopolized by foreign companies, and the supporting system of the overall domestic industrial chain is still relatively weak.

Development prospects of China's electronic chemicals industry

1. Downstream demand continues to grow

The main downstream industries of electronic chemicals include photovoltaic, display panel and semiconductor industries. Among them, the photovoltaic industry, benefiting from the proposed carbon peak and carbon neutral targets, will continue to maintain rapid growth in market demand in the future. It is estimated that the total installed capacity of domestic photovoltaic power will reach 66.46GW in 2025. The display panel industry mainly benefits from changes in downstream demand such as large-screen TVs and smart cars. There is still room for growth in this sector in the future. The semiconductor industry has benefited from the vigorous development of downstream consumer electronics, home appliances, communications, automotive electronics, artificial intelligence, and VR. According to the forecast of IC Insights, by 2025, the scale of China's integrated circuit manufacturing industry will increase to US$43.2 billion, with a compound annual growth rate of 13.7% from 2020 to 2025.

2. Downstream industry transfer

According to the Financial Times, China’s global share of semiconductor microcircuit production will increase to 24% in 10 years, and the semiconductor manufacturing industry will accelerate its transfer back to China. The domestic electronic chemical industry will enter a stage of rapid development. 

3. Downstream industry upgrading

The development trend of the downstream display panel industry is the rapid commissioning of high-generation LCD panels and OLED panels, with a rapidly increasing proportion. The development trend of the semiconductor industry is that the proportion of 12-inch wafer production lines and the rapid commissioning of advanced processes continues to increase. The upgrading of downstream industry has greatly increased the demand for electronic chemicals. Take wet electronic chemicals used in the semiconductor industry for example. The demand for wet electronic chemicals from the 12-inch wafer production line is about 240 tons/10 000 pieces, and the grade requirements are G4 and G5, which is 5.3 times the demand for 8-inch production lines (G3, G4 grade). The upgrading of downstream industries will bring new opportunities for domestic electronic chemical companies.

4. Huge room for import substitution

The level of localization of electronic chemicals is still low, and there is still a large room for import substitution of products used in the display panel and semiconductor industries. Take wet electronic chemicals for example. At present, foreign electronic chemical manufacturers have achieved mass production of G5 grades, while the mainstream domestic production still stays at G2 and G3. Only a few domestic enterprises that produce ultra-clean and high-purity reagents have mastered the technology of some standard products above G3. In the field of solar cells with lower product grade requirements (G1 required), localization has basically been achieved.

In the semiconductor field, the localization rate of wet electronic chemicals for wafer of 6 inches and below has increased 82%, and the localization rate of wafer of 8 inches and above has slowly increased to about 20%. The overall wafer processing based wet electronic chemicals’ localization rate is about 26%. In the field of display panels, domestic wet electronic chemicals for generation 3.5 and below have been localized, the localization rate of 4.5 and 5 generation lines is about 30%, and the localization rate of wet electronic chemicals for generation 6 and above is about 10%. The overall localization rate is about 25%.