China Securities Co., Ltd.: Computing power demand triggers MLCC shortage wave, PTFE expected to open up new demand market in the electronics field.

China Securities Co., Ltd. released a research report stating that with the acceleration of new productive forces and domestic substitution, China's chemical new materials are currently in a resonance period of "expansion of the high prosperity track + elevation of technological barriers." With the trend of global industrial chain transfer, some domestic new materials industries such as new energy materials, Siasun Robot&Automation materials, consumer electronics materials, synthetic biology, etc., are gradually moving to the forefront globally, leading the industry's technological iteration. Semiconductor materials, special engineering plastics, etc., are also accelerating upgrades in the context of domestic substitution, showing great potential for China's chemical new materials. The rapid growth of high-frequency and high-speed demand such as computing power is leading to the potential large-scale application of electronic grade PTFE. PTFE material, known as the "plastic king" for its main characteristics including excellent thermal stability, chemical resistance, dielectric properties. The downstream demands for PTFE, including military industry, high-speed cables for servers, and high-speed boards, are all expected to grow rapidly. With the upcoming production node of NVIDIA's new generation server, Rubin ultra, the industry is actively discussing the possibility of using PTFE material as orthogonal backplane, with domestic Shengyi Technology actively conducting verification. China Securities Co., Ltd. believes that with the continuous growth of high-frequency and high-speed transmission demands led by computing power infrastructure, the downstream areas of PTFE are expected to be redefined. The rapid development of AI is leading to shortages of MLCCs. As the artificial intelligence industry rapidly develops, AI servers have significantly increased the amount of MLCCs due to high power consumption, with the increase estimated to be over three times as reported by China Securities Journal. The electrification, intelligence, and connection of vehicles have become the development trend of the automotive industry, leading to a significant increase in the usage of MLCCs per vehicle. The recent price increase of electronic grade HF is supported by the rising price of raw materials. South Korean HF manufacturers, SOLBE, ENF Technology, and Husung have seen a price increase of approximately 40% since the beginning of the year for Chinese-produced anhydrous hydrogen fluoride. Additionally, with recent strong demand for electronic grade HF in the semiconductor field, where HF is mainly used for semiconductor cleaning and the advancement of nanometer processes is increasing the need for cleaning steps, the demand for electronic grade HF is expected to double. Currently, domestic production capacity for electronic grade HF is around 150,000 tons, with recent increases in production rates suggesting that demand orders are rapidly growing. With the driving force of cost and rapid growth in demand orders, prices are expected to substantially increase in the future. SEMI stated that despite the impact of the Middle East crisis, trade uncertainties, and raw material shortages, the momentum of soaring semiconductor demand will continue. Driven by AI data centers, global semiconductor sales are expected to reach $1 trillion this year and double to $2 trillion by 2035. Geopolitical risks are currently diffi...