China Securities Co., Ltd.: Continue to pay attention to the "de-Japanese" trading of semiconductor materials. Focus on powder materials and fluoropolymer materials.

China Securities Co., Ltd. released a research report stating that the current AI inflation has reached the material end, and the targets in the material link are more diversified. Moreover, most strong companies are in Japan, and there are signs of accelerated tension in bilateral relations since the second half of 2025. The supply side "de-Japanization" and the demand side AI inflation have become an almost perfect combination. The firm judges that the "de-Japanization" theme will have more room for interpretation, continue to focus on "de-Japanization" transactions, and focus on the growth speed of domestic targets of powder materials and fluorinated polymer materials and the opportunity for accelerated import substitution. China Securities Co., Ltd.'s main points are as follows: Continue to focus on the material selection under the "de-Japanization" trading Japanese semiconductor material companies have a high market share in the global semiconductor material market. According to the firm's statistics, they hold the first market share in 14 of the 19 major materials. On the one hand, it is the demand expansion brought by industry trends, and on the other hand, it is the supply substitution logic brought by tense national relations. The "de-Japanization" of key materials is expected to further evolve. The firm has selected high market share sub-races of Japanese companies, focusing on investment opportunities brought by domestic substitution acceleration: CMP polishing liquid, EUV photomask, High K metal precursor, advanced epoxy molding compound for packaging, anti-reflective coatings for lithography, ceramic substrates and MLCC dielectric powders, InP substrates, ABF film, FC-BGA solder resist, high-end fluorine materials, etc. MLCC nanoceramic powder outlook reversed under AI demand drive As AI servers upgrade from GB300 to Vera Rubin/Rubin, and the automotive electronics expand under electrification/800V/advanced autonomous driving, high-end MLCCs face bottlenecks and pass upstream to barium titanate powder/formula powder. AI-grade powders have particle sizes of 100-300nm and require higher consistency and batch stability. The price of AI-grade powders is significantly higher than traditional powders; at the same time, high-end formula powders rely on rare earth doping systems, and under rare earth export constraints and the security of the China-Japan supply chain, uncertainties exist in Japan's system expansion and closed supply. Domestic suppliers such as China Ceramics with a high-end MLCC dielectric powder production capacity are expected to fully benefit from the expansion of demand for high-end MLCC powders in the AI era. Fluorine materials: Performance drives the explosion of AI & semiconductor application scenarios, a good choice for de-Japanization Japan has a strong leading position in the fluorine chemical field, and application scenarios are expanding. PFA: used for etching and cleaning grooves, cleaning tanks, CMP components, and hot exchanger linings in the semiconductor etching and cleaning processes, as well as wafer carriers and CVD reaction chamber coatings during wafer transfer. With the advancement of advanced processes, the demand for PFA is expected to increase significantly. Electronic-grade PTFE: PTFE, due to its extremely low Df and Dk values, is currently the most ideal high-frequency high-speed CCL substrate resin material. Due to PTFE's significant cost advantage compared to other materials, coupled with its performance advantages, it is expected to usher in a period of rapid growth. FEP: High-end FEP can also be used as fiber optic protective layers and semiconductor wet cleaning pipelines. Risk warning: The implementation of related policies is less than expected, the iteration of related technologies is less than expected, safety incidents affect production, raw material prices fluctuate greatly, and downstream demand is less than expected.