Sinolink: Advanced packaging + storage demand drives the semiconductor packaging industry chain to increase in both quantity and price.

Sinolink released a research report stating that with the pull of advanced packaging and storage demand, it is optimistic that the semiconductor packaging material industry chain will see a simultaneous increase in quantity and price, with epoxy molding compound (EMC) upgrading with advanced packaging, high-end product unit prices reaching more than 10 times the basic model, and ample room for domestic production; the key filler silicon powder (such as Low- spherical aluminum) demand is growing in sync; and the upstream carrier boards of Low-CTE electronic fabric and carrier copper foils are facing supply shortages and overseas monopolies, making them key areas for domestic substitution. Sinolink's main points are as follows: Storage packaging materials including: epoxy molding compound, silicon powder, upstream carrier boards: Low-CTE electronic fabric/carrier copper foils. Epoxy molding compounds: Low domestication rate, expected product structure iteration, and significant increase in unit value quantity Epoxy molding compound (EMC) belongs to the encapsulation materials in the semiconductor packaging materials. With the continuous development of advanced IC packaging technology, there is an increasing demand for higher comprehensive performance of EMC materials. The domestication rate is low, with an estimated domestication rate of high-performance EMC at only 10-20%, and even lower for advanced packaging. Major overseas competitors include Sumitomo Bakelite, and Resinova. Domestic enterprises are expected to reshape the competitive landscape in the EMC industry. As domestic testing moves towards advanced packaging iteration, there is a logical structure iteration and significant increase in unit value quantity for epoxy molding compounds. For example, epoxy molding compounds used in advanced packaging FOWLP/FOPLP need to be in granular form (GMC) and have higher performance requirements. According to Heso Warwick data, the unit price of advanced packaging EMC is 5-6 times that of high-performance EMC, and more than 10 times that of basic EMC prices. For storage applications, as SK Hynix transitions from DRAM to HBM, its HBM uses MR-MUF technology to inject liquid EMC into the gaps in the semiconductor chip. Silicon powder: key raw material for epoxy molding compounds The main raw materials for epoxy molding compounds are silicon powder, epoxy resin, phenolic resin, additives, etc. Other auxiliary materials include packaging materials and spare parts. Inorganic fillers effectively reduce the thermal expansion coefficient of the epoxy molding compound. According to Jiangsu HHCK Advanced Materials' acquisition target Heso Warwick data, Novoray Corporation will be the largest supplier in 2023-2024, purchasing silicon powder and additives, with silicon powder and additives accounting for 29% and 26% respectively of Heso Warwick's raw material procurement amount in 2024. Low- spherical aluminum can effectively solve the issues encountered in high-density stacking packaging in the storage field. Novoray Corporation's Low- spherical aluminum series products have a low content of radioactive elements uranium (U) and thorium (Th) below the 5ppb level, with the lowest level being below 1ppb. They have been stable in supplying leading customers in the industry. Upstream carrier boards: Low-CTE electronic fabric/carrier copper foils Packaging substrates are similar to PCB manufacturing principles, with features such as high density, high precision, high performance, miniaturization, and thinning, making them an indispensable part of chip packaging used mainly in mobile smart terminals, servers/storage, etc. (1) Low-CTE electronic fabric: Main application scenarios include storage, FC-BGA, 5G high-frequency communication fields, which have become an important supply bottleneck in the carrier board sector. According to a report from China Taiwan Commercial Times, Mitsubishi Chemical Corporation issued a notice due to a shortage of Low-CTE fiberglass fabric raw materials and an increase in order demand, leading to a significant extension in delivery times for its BT carrier board materials, with some Low-CTE fiberglass fabric delivery times reaching 16-20 weeks. (2) Carrier copper foils: Mainly used in IC carrier boards, class carrier boards, current global market size for peelable ultra-thin copper foils is approximately 5 billion yuan, which has been monopolized by Japan's Mitsui Metals for many years. With the development of AI technology and the increasing demand for advanced chips (e.g. SLP), the carrier copper foil market is expected to continue to grow. The pace of Japanese companies expanding production and their willingness is weak, coupled with the accelerated localization of the domestic supply chain, which is favorable for the domestic substitution process of carrier copper foils. Risk Warning Domestic substitution is slower than expected; entry into overseas supply chain is slower than expected; deterioration in industry competition landscape.