Recently, the semiconductor industry has received heavy good news. The downward cycle of the packaging and testing industry that lasted for nearly two years has completely ended. Semiconductor packaging has officially reached a turning point in the economy. Ceramic packaging materials, which have been underestimated by the market, are expected to take advantage of this to start a big market.
Many investors usually pay attention to the semiconductor sector. Most of them focus on popular tracks such as chip design, lithography machines, and memory chips, but they ignore the packaging materials hidden at the bottom of the chip, especially ceramic materials.
In most people’s minds, ceramics are just dishes and tea sets that are seen every day, and it is difficult to connect them with high-end AI chips and automotive power chips.
Most financial content on the market analyzes the turning point of semiconductor packaging, focusing mostly on the rebound in orders from domestic packaging and testing manufacturers and the iteration of Chiplet advanced packaging technology, but does not touch on the essence.
Today, the performance of AI chips, vehicle power chips, and high-end computing chips is becoming increasingly powerful, but power consumption has also increased dramatically, and a large amount of heat will be generated during operation.
Chips are extremely sensitive to high temperatures, and excessive temperatures can lead to jamming, crashes, or even scrapping.
In the past, traditional resin substrates and ordinary PCB sheets commonly used in the packaging industry had poor thermal conductivity and were unable to meet the heat dissipation needs of high-power chips.
Therefore, heat dissipation materials are the key to limiting the performance release of high-end chips.
Starting from the second quarter of 2026, three major industry signals indicate that the packaging industry has reached an inflection point: First, the world’s leading packaging and testing manufacturers have raised packaging foundry prices, and the industry’s capacity utilization has rebounded significantly; second, AI servers and new energy vehicle power chip orders have continued to increase, forcing packaging factories to replace high-end heat dissipation materials; third, overseas ceramic material manufacturers have tight production capacity, and the global supply and demand gap for ceramic packaging materials continues to expand.
It can be seen that this round of packaging market is a material replacement market driven by rigid needs, and ceramic materials have become the key.
At present, the three mainstream heat dissipation materials for semiconductor packaging each have their own advantages and disadvantages.
Ordinary resin substrates are cheap but have poor thermal conductivity and are only suitable for low-power chips; metal substrates have medium thermal conductivity but insufficient insulation and poor stability; while ceramic substrates (aluminum nitride, alumina ceramics) have strong thermal conductivity, good insulation, high temperature resistance and resistance to deformation, making them ideal materials for high-end chip packaging.
Data show that the global semiconductor ceramic packaging materials market will reach US$3.29 billion in 2025, and is expected to exceed US$5 billion in 2026, with an annual growth rate of nearly 40%, but the domestic localization rate is less than 15%.
This current market situation is supported by three medium- and long-term positive factors.
First, the semiconductor inventory cycle has bottomed out, the packaging and testing industry has fully recovered, and downstream terminals such as consumer electronics, AI computing power, and automotive electronics have released inventory replenishment needs, driving the repair of the semiconductor back-end industry chain.
The second is the popularity of AI high-power chips. Chip giants such as NVIDIA and AMD have adopted ceramic packaging substrates as standard equipment, opening up long-term incremental space for ceramic materials.
The third is domestic independent and controllable acceleration. The entire industry chain of domestic ceramic materials has achieved technological breakthroughs. Product performance is comparable to that of overseas manufacturers and the price advantage is obvious, ushering in the golden window period for domestic substitution.
In the semiconductor ceramic material industry chain, the upstream ceramic powder is the core raw material and has high technical barriers. For example, China Ceramics Materials is the domestic leader in electronic ceramic powder; the midstream ceramic substrate is the link that benefits the most, with Sanhuan Group leading in the mass production of ceramic packaging bases and substrates; downstream ceramic packaging devices and optical modules supporting ceramic components have rich application scenarios, and Canqin Technology’s ceramic packaging tube and shell products are worthy of attention.
For the follow-up market, investors should focus on the materials side rather than chasing high-purity packaging stocks, because upstream ceramic material companies have dual dividends of pricing power and domestic substitution, and their performance is more flexible.
At the same time, this is a mid- to long-term slow bull market, suitable for attention on dips.
However, we also need to pay attention to risks such as lower-than-expected global semiconductor terminal demand, the release of production capacity from major overseas manufacturers, and fluctuations in the A-share semiconductor sector.
The semiconductor packaging industry has reached an inflection point. Ceramic packaging materials are ushering in a cycle reversal, domestic substitution and a strong demand for computing power. There are medium and long-term opportunities in segmented tracks.
Unpopular material subdivision tracks that are usually ignored may often lead to unexpected market trends.
