Sealand Securities Co.,Ltd. has released a research report indicating that the AI wave is set to usher in a transformative era for the industrial chain. As the material foundation for various industries, the chemical sector is poised to embrace a new development landscape. Driven by AI, demand for related chemical materials is expected to achieve sustainable growth. The pace of technological advancement and innovation is likely to accelerate, while China's "bottleneck" materials are expected to see a faster rate of domestic substitution. Considering the overall empowerment and driving effect of AI on the chemical industry, the firm maintains an "Overweight" rating for the basic chemicals sector.
Computing Power Soars, Liquid Cooling Technology Becomes Inevitable, Liquid Cooling Materials Offer Great Potential
The rapid development of AI has increased demand for high-performance computing power across related industries, subsequently raising the requirements for equipment heat dissipation and cooling. Liquid cooling technology uses liquid instead of air as a cooling medium, directly or indirectly contacting heat-generating components. This significantly improves heat dissipation efficiency, effectively meeting the high cooling needs of individual points, entire cabinets, and data centers.
AI Chips are the Core of Artificial Intelligence, Driving Major Development in Semiconductor Materials
AI chips are the core of AI and will see rapid development and application with the AI wave. Semiconductor materials are the foundation of chips. Benefiting from AI-driven demand, semiconductor materials will gain greater development space, and the pace of technological change and domestic substitution will further accelerate. Semiconductor materials are mainly divided into manufacturing materials (silicon wafers/compound semiconductors, photoresists, wet electronic chemicals, electronic gases, photomasks, CMP slurries and pads, sputtering targets, etc.) and packaging materials. Among these, the localization rate for several key consumables in the semiconductor industry is generally low, leading to strong demand for domestic substitution. This is expected to result in a surge in demand and technological breakthroughs amid the rapid development of AI.
AI Drives Demand for Equipment and Components, High-Frequency High-Speed PCBs Poised to Become Mainstream, Reshaping and Benefiting the PCB Industry Chain
Printed Circuit Boards (PCBs) are crucial electronic interconnects for electronic products, often called the "mother of electronics." The rapid development of AI requires high computing power, which imposes new and greater demands on the quantity and quality of equipment and electronic components. This will drive new growth in PCB demand, with high-frequency, high-speed PCBs likely becoming the mainstream development trend. According to Prismark, the global PCB market value is projected to reach $94.661 billion by 2029, with a CAGR of 5.2% from 2024 to 2029, signaling a revival in global PCB production value. Demand for materials within the PCB supply chain is expected to be reshaped under this new development paradigm.
Demand for MLCC Powders for AI Servers Set to Surge, Driving Upward Cycle for the MLCC Industry
As the reliability and integration of Multilayer Ceramic Capacitors (MLCCs) increase, their application scope broadens. They are widely used in various military and civilian electronic devices and equipment, earning the nickname "the rice of the electronics industry." According to the China Electronic Components Association, the global MLCC market size is expected to reach 118 billion yuan by 2027, with a CAGR of 5.46% from 2024 to 2027. Global MLCC demand is projected to reach 5,831.2 billion units, with a CAGR of 3.36% from 2024 to 2027. The cost of MLCCs is primarily composed of ceramic powder, internal electrodes, external electrodes, packaging materials, labor costs, depreciation of equipment, and other items.
New Display Technologies are the Window for AI Presentation, Poised to Lead a New Round of Development in Optical Display Materials
As the carrier for information presentation and human-computer interaction in the digital age, display panels are the core portal for humans to obtain visual information. The display industry is deeply integrating with emerging sectors like AI, 5G, and the Internet of Things. Many AI fields require new display technologies as presentation carriers. The new demand generated by AI will lead to the rapid development of new displays, benefiting related display and optical materials. China's optical films, OLED light-emitting materials, OCA adhesives, and other materials are still in the second or third tier, lagging behind companies in the US, Japan, and South Korea, indicating a high demand for domestic substitution.
Risk Factors
AI technology development and demand growth may fall short of expectations; technology iteration risks; delays in the commissioning progress of new projects; risks related to the development of new material technologies and domestic substitution falling short of expectations; significant fluctuations in raw material prices; intensifying industry competition; geopolitical instability; major shifts in industry policies; and risks associated with slower-than-expected earnings growth and valuation corrections for the companies under coverage.