China Securities Co.,Ltd.: The metal new materials market is growing rapidly, and upstream materials are welcoming historic development opportunities.

China Securities Co.,Ltd. released a research report stating that China's new materials industry has gone from following to breaking through, and then to leading in some fields. The R&D and industrialization of frontier materials are accelerating, and the market size is growing rapidly. With the rapid development of the AI industry and industry trends such as high power and high voltage, the metal new materials sector is welcoming historic development opportunities: leadership in soft magnetic materials has been transformed into an advantage in the AI chip inductor field; ultra-fine nano nickel powder, as the core material for ultra-high-capacitance MLCCs, is already leading globally; and the high-purity aluminum industry chain is fully benefiting from rising power supply demand on the AI server side. In addition, China's advantageous resources, such as rare earths, indium, germanium, and gallium, are gradually amplifying resource advantages into the materials field due to export controls. Overseas high-end materials industries related to these resources are showing a trend of shifting to China, and domestic upstream materials have prominent advantages. Domestic fields such as high-purity indium, indium phosphide, and yttria-stabilized zirconia are welcoming historic development opportunities. The main views of China Securities Co.,Ltd. are as follows: The growth in AI server power is driving continued growth in demand for AI chip inductors and AI capacitors, while upstream raw material industries such as nickel powder, carbonyl iron powder, metal soft magnetic powder (cores), thermal materials, high-purity aluminum, aluminum electrode foil, high-purity indium, and indium phosphide are developing rapidly. Magnetic materials: Soft magnetic materials are the foundation of electrical energy conversion, and material performance directly determines the ceiling of device performance. The root of the breakthrough in chip inductors lies in the substantial increase in AI requirements for power and performance. Inductors made from traditional materials cannot meet demand, so chip inductors made from new magnetic materials have emerged as required, and upstream magnetic material companies can take the lead in breaking through from the materials side. There are three major trends in AI chip inductors: single-phase inductors shifting to multi-phase inductors, discrete inductors shifting to TLVR inductors, and horizontal power supply shifting to vertical power supply. In the future, with increased AI chip shipments, rising chip power, and upgraded inductor performance, the AI chip inductor market size will expand rapidly, with scale growth = chip shipment multiple power increase multiple value-per-unit increase multiple. The market size is expected to rise from RMB2.4 billion in 2025 to more than RMB30 billion in 2028. Companies integrating materials and devices will see their advantages become more prominent. Ultra-fine nano nickel powder: globally leading in a niche track, and a core material for high-end MLCCs. Trends such as miniaturization, high capacitance, and high frequency in MLCCs require nickel powder to have many detailed indicators, including good sphericity, high tap density, high conductivity, low electromigration, good corrosion resistance and heat resistance to solder, a relatively high sintering temperature, and good high-temperature co-firing performance with ceramic dielectric materials, all of which significantly affect MLCC performance. China's 80nm nickel powder that can be mass-produced has already reached the world's top level. With future growth in computing power demand, demand for ultra-high-capacitance MLCCs will grow rapidly, and demand for nano nickel powder will become increasingly fine. The field of nano nickel powder for MLCCs is welcoming good investment opportunities. High-purity aluminum - electrode foil: server power and voltage inflation are driving explosive growth in demand across the power supply side aluminum capacitor industry chain. The high-power and high-voltage trend for AI servers has been established. Cabinet power is linearly related to aluminum electrolytic capacitor demand, bringing the first round of demand growth. Moreover, the "series demand" of the 800V platform for bullhorn capacitors itself, under a complete design that fills energy storage/capacitance, provides about 4x structural amplification, bringing a second round of growth. Future demand growth for aluminum electrolytic capacitors can be expected. Every link in this industry chainhigh-purity aluminum, electronic light foil, and electrode foilis expected to benefit greatly. Indium: export controls resonate with AI computing power optical communications, and high-purity indium has entered a high-prosperity cycle. As a by-product of zinc smelting, indium has extremely rigid supply, and China accounts for more than 70% of global refined indium output. On the demand side, ITO targets (accounting for 80%) form a solid base, while AI computing power drives optical modules to upgrade to 800G/1.6T, pulling indium phosphide substrate demand to grow about 4.3x over three years (CAGR 107%), with a supply-demand gap exceeding 70%, corresponding to high-purity indium demand rising from about 31 tonnes in 2026 to about 153 tonnes in 2028. During the year, the indium price rose from about RMB2,500/kg to a peak of RMB5,700/kg, an increase of nearly 90%. The processing barriers for high-purity indium are extremely high. Domestic companies have broken through 7N-8N ultra-purity processes, and domestic substitution is accelerating. Sector pricing is shifting from theme-driven valuation expansion to verification through orders and profit realization. Zirconium: China's nano zirconia is welcoming rapid development opportunities. Global zircon ore supply is highly concentrated (Iluka, Tronox, and Rio Tinto account for about 60%). China's export controls on yttrium oxide have restricted raw materials for Japan's Tosoh and Daiichi Kigenso Kagaku Kogyo (together accounting for about 40% of the global high-end powder market)Tosoh has already issued a notice to Aidite to suspend supplyand Chinese manufacturers are expected to take over about 6,000 tonnes of capacity transfer, with global share rising from about 25% to more than 40%. On the demand side, solid-state batteries (zircon sand consumption of about 110,000 tonnes in 2030), AI data centers driving SOFC volume growth (YSZ demand rising from 110 tonnes in 2025 to about 1,000 tonnes in 2028), electronic ceramics, optical modules, and MLCCs are all showing multiple growth points; combined with a price gap of about 200x between domestic and overseas yttrium oxide, integrated companies that connect upstream zirconium oxychloride and master high-end powder processes will benefit simultaneously from the dual dividends of domestic substitution and restructuring of the raw material landscape.