The semiconductor sector has been in constant turmoil recently. Most investors are focusing on the main lines of chips, but ignoring the underlying packaging materials.
Inconspicuous segments such as ceramic packaging materials have been left out of the market for a long time.
However, as the global advanced packaging industry ushered in multiple benefits, the demand logic for ceramic materials that had previously been ignored has fundamentally changed, and the industry has ushered in an inflection point.
First understand the underlying logic. In the AI era, why packaging is inseparable from ceramic materials.
Many novice investors cannot tell the difference between plastic, metal and ceramic packaging.
The chip can be compared to a high-power engine, and the packaging material is the engine base and shell. Its heat dissipation, insulation, and stability determine whether the engine can operate stably for a long time.
Traditional organic plastic substrates have obvious shortcomings and cannot be adapted to high-power AI chips.
In the past, consumer electronics chips had low power consumption, and ordinary resin and plastic substrates were low-cost and simple in process, which were the mainstream choices for packaging and testing.
However, the power consumption of a single high-end GPU card in AI servers has exceeded 3 kilowatts. Ordinary organic substrates are resistant to high temperatures and have poor thermal conductivity. Problems such as substrate warping and circuit breakage are prone to occur at high temperatures, leading to chip failure.
Ceramic materials have two core advantages and are urgently needed for advanced packaging.
Ceramic substrates mainly include two categories: aluminum oxide and aluminum nitride, which have extremely strong thermal conductivity. The thermal conductivity of aluminum nitride ceramics is hundreds of times that of ordinary resin substrates, which can quickly take away the high temperature of the chip. The thermal expansion coefficient is highly matched with the silicon chip, and does not deform when high and low temperatures are repeatedly switched. It has good insulation and air tightness. Only ceramic packaging materials can be used in high-end scenarios.
The application scenarios continue to expand, and the demand no longer relies solely on computing power.
Downstream applications cover computing optical communications, new energy vehicles and energy storage, communications, industrial control and high reliability fields.
In the past, ceramic materials were niche high-end consumables with limited market space; now the two trillion-dollar tracks of AI and new energy vehicles are expanding, industry demand has exploded, and the growth logic has been reshaped.
Multiple benefits have come to fruition, and the semiconductor packaging and testing industry has ushered in a cycle turning point.
This is not a short-term theme catalysis, but a mid- to long-term recovery brought about by simultaneous improvements in the four major dimensions of inventory, production capacity, technology, and supply chain.
The industry inventory cycle has bottomed out, and utilization rates and gross profit margins continue to recover.
From 2024 to 2025, the semiconductor industry chain will destock, consumer electronics demand will be weak, the utilization rate of packaging and testing companies will decline, and gross profit margins will be under pressure.
In the second quarter of 2026, industry inventories returned to a reasonable range, memory chip prices increased, the utilization rate of domestic leading packaging and testing companies increased, gross profit margins increased, and the industry exited the downward cycle.
Global leading companies are increasing their focus on advanced packaging, and the gap in high-end production capacity continues to expand.
Advanced packaging has become the core route for chip performance upgrades. Global chip manufacturers are turning to 2.5D and 3D chiplet stacking solutions. CoWoS advanced packaging production capacity is in short supply.
Global leading companies are expanding high-end packaging production lines. The implementation of new production capacity is long, and supply and demand are tight, which will drive up the purchase of ceramic substrates and tube casings.
The supply of overseas high-end ceramics has shrunk, and domestic substitution has ushered in a golden window period.
Global high-end ceramic substrates and high-purity ceramic powders have long been monopolized by a few overseas companies. Recently, overseas companies have reduced production capacity and adjusted their supply rhythm. In order to ensure the security of the supply chain, downstream companies have increased their procurement efforts from domestic manufacturers.
Domestic companies are accelerating technological research, gradually mass-producing high-end products, and implementing the logic of domestic substitution.
Downstream terminal capital expenditures have increased, and long-term demand is sustainable.
The construction of data centers and intelligent computing centers, the increase in the volume of new energy vehicles, and the upgrade of communication infrastructure. Procurement in these areas is long-term capital expenditure and can provide stable growth momentum for the ceramic packaging materials industry for 3 to 5 years.
Dismantling the ceramic packaging materials industry chain shows that different links have different opportunities and elasticities.
Upstream high-purity ceramic powder has the highest technical barriers. Enterprises that master independent mass production can control costs and have strong bargaining power. However, the technical research cycle is long and suitable for medium- and long-term layout.
Midstream ceramic substrate and tube casing manufacturing is the core beneficiary link of this round of market, with high performance flexibility and capital focus.
Although rising industry prosperity for downstream packaging and testing OEM companies will drive revenue and profit recovery, competition is fierce and gross profit margins are lower than those of upstream materials companies.
Retail investors should avoid pitfalls in practical operations.
We cannot blindly chase high prices by treating short-term impulses on topics as mid- to long-term market trends. We must prioritize tracking corporate orders and production capacity announcements. It is not advisable to buy regardless of the industry chain link. We must screen companies with a high proportion of ceramic business and have entered the supply chain of leading customers. We must not ignore the cyclicality of the industry and adopt the idea of dividing warehouses and bands. We must not only look at the industry space, but must prioritize the layout of high-end track segments.
At the same time, potential risks in the industry must be viewed objectively, such as lower-than-expected downstream demand, suppression of overseas technical barriers, price competition caused by industry expansion, and overall market fluctuation risks.
For investors with low risk tolerance and who do not follow the technology industry chain for a long time, it is not recommended to concentrate on position layout, and a small number of positions can be allocated in a balanced manner.
In short, in the past, ceramic packaging materials were underestimated due to high awareness threshold and low exposure.
Now multiple industries are benefiting from the resonance, and the industry is ushering in a turning point in prosperity.
Midstream aluminum nitride ceramic substrate and integrated powder substrate manufacturers are the segment with the most elastic performance. The long-term procurement needs of the two major downstream tracks provide support for the growth of the track.
Retail investors must participate rationally and make decisions based on their own risk tolerance.
