GF SEC: Spherical micro-silica powder materials are widely used, and domestic newcomers are gradually achieving domestic substitution.

GF SEC published a research report stating that spherical micro-silica powder is widely used in high-end copper-clad laminates (CCL) and epoxy encapsulants for large-scale integrated circuit packaging. The logic behind the use of spherical silica in CCL is driven by an increase in both total and unit usage, coupled with product upgrades that together drive the growth in value. On the demand side, AI computing power and advanced packaging have pushed spherical silica into the essential material category, while on the supply side, the long certification cycle and slow expansion of chemical production have led to a supply-demand gap for high-end spherical silica, indicating that the product is expected to witness simultaneous growth in both volume and price, with domestic newcomers gradually achieving local substitution. GF SEC's main points are as follows: Spherical silicon micro-powder is the cornerstone of AI computing power and advanced packaging. Silicon micro-powder is a heat-resistant, insulating, low-expansion, and thermally conductive ultra-fine particle material that can be used in fields such as copper-clad laminates, epoxy encapsulants, electrical insulation materials, adhesives, ceramics, and coatings. Due to its high filling rate, good flowability, low thermal expansion coefficient, and excellent dielectric properties, spherical silicon micro-powder is widely used in high-end copper-clad laminates and epoxy encapsulants for large-scale integrated circuit packaging, with a projected downstream application share of 68% for semiconductor packaging and 32% for high-frequency, high-speed copper-clad laminates by 2025. Spherical silica is a key material in the era of M9+ CCL, facing development opportunities for simultaneous volume and price increases. Spherical silica is primarily filled into the resin of copper-clad laminates, with its weight percentage in the resin system ideally between 24-55% for optimal CCL performance. The logic for spherical silica involves three weight-price considerations: (1) The demand for data processing and computing power increases among AI servers, switches, and general servers, resulting in more PCB layers and a corresponding increase in the usage of spherical silica; (2) CCL is upgrading from M8 to M10, where the low dielectric resin leads to higher CTE, necessitating an increase in the unit usage (filling rate) of spherical silica for reliable high-layer boards; (3) High-speed signals require lower Dk/Df, prompting iterations of spherical silica products to achieve higher purity/roundness, narrower particle size distribution, and surface modification, resulting in a significant price increase. Therefore, the logic for spherical silica in CCL is that both total and unit usage increases, along with product upgrades driving value growth. Low- spherical silica is a stabilizer for chips and is indispensable in advanced packaging. Spherical silica is mainly used in semiconductor packaging for epoxy encapsulants (EMC), bottom-fill adhesives, and packaging substrates to regulate thermal expansion coefficients, enhance thermal conductivity, and improve mechanical strength, achieving a filling rate of 60%-90% in EMC. As HBM continues to evolve towards higher generations like HBM3/4, the number of chip stacking layers increases, and the I/O rates continue to rise, simultaneously raising the packaging dimensions and interconnection densities, leading to increased demand for spherical silica and higher performance requirements. Chemical method Low- spherical silica eliminates soft errors caused by alpha particle interference from the source and is the most suitable EMC filler in HBM. CoWoS packaging has increased the demand for Low- spherical silica micro-powder, with the mask size expected to rise from the current 3.3x to 16x by 2029, while the number of HBM stacks is projected to increase from 12 to 24, leading to a proportional expansion of advanced packaging materials and a significant boost in demand for high-purity Low- spherical silica. It is estimated that by 2027, demand for high-end spherical silica will exceed 25,000 tons, with domestic substitution ongoing. According to Prismark, the global M6+ CCL market for spherical silica reached nearly $1 billion in 2030; according to PW Consulting, the market for Low- spherical silica in advanced HBM packaging will reach $1.35 billion by 2030. On the demand side, the firm expects that the demand for high-end spherical silica corresponding to high-speed CCL will be 16,400 tons in 2027, while the total demand for high-end spherical silica in high-performance advanced packaging EMC will be 8,800 tons. From the supply perspective, high-end spherical silica has long been dominated by Japan, with electric chemical, Longsen, and Nippon Steel accounting for 70% of the global market share, while Ayduma monopolizes the market for spherical silica below 1 micron. Novoray Corporation is a leading domestic player in spherical silica and has mastered three major processes: flame melting, high-temperature oxidation, and liquid-phase chemical preparation. The company is adding 3,600 tons/year of ultra-pure spherical silica via liquid-phase methods (construction period of 36 months), focusing on HBM/Chiplet advanced packaging and M8-M10 CCL. Low- micro and sub-micron spherical silica have been batch introduced into the storage packaging chain, and companies like Jinyi New Materials and Guangzhou Lingwe Technology (which acquired Jiangsu Huimai) are also actively researching and advancing mass production, indicating a long-term potential for achieving domestic substitution. Risk Warning: Industry cyclical fluctuations, intensified market competition, and technological innovations not meeting expectations.