China Galaxy Securities: The AI wave is accelerating, bringing opportunities and changes to the chemical industry

According to the Zhitong Finance APP, China Galaxy Securities released a research report stating that recently, DeepSeek has broken the long-standing path dependence of "stacking computing power" in the global AI industry, and the combination of "low cost + open-source route" has greatly lowered the application threshold of AI, which is expected to stimulate a wave of AI innovation across society and accelerate the popularization and application of AI in various industries. The impact of the AI shockwave triggered by DeepSeek on the chemical industry is expected to be mainly reflected in the following two aspects. First, the accelerated development of the AI industry will generate demand momentum for high-end chemical new materials, accelerating the pace of domestic substitution for related materials. Second, AI will empower the entire chemical industry chain, enhancing operational efficiency at all stages, especially in research and development and operations.

AI Accelerates Domestic Substitution of High-End Chemical New Materials.

Although the chemical industry is not the primary entity for the initial research and development of AI technology, high-end chemical new material companies can provide key raw material support for equipment in the computing power and application segments of the AI industry chain. AI Computing Power Segment: 1) Coolants: AI technology drives the upgrade of computing power and triggers a wave of data center construction, with fluorinated liquids being ideal immersion liquid cooling systems that can effectively reduce energy consumption in data center cooling systems, showing broad application prospects under the "dual carbon" background. 2) PPO: The growth of AI computing power combined with the upgrade of PCIe 5.0 drives an increase in demand for high-frequency PCBs, thereby enhancing the demand for high-performance resins. PPO, as one of the mainstream resins for high-frequency and high-speed copper-clad laminates, is expected to benefit significantly.

AI Application Segment: 1) PEEK: PEEK has excellent specific strength, dielectric constant, and chemical resistance, making it a key solution for lightweight humanoid robots. GGI estimates that global humanoid robot sales will reach 605,700 units by 2030, corresponding to a CAGR of 92.51% from 2024 to 2030. The increase in production and sales of humanoid robots is expected to open up incremental demand space for PEEK. 2) COC/COP: COC/COP has significant advantages such as low birefringence, excellent heat resistance, and ultra-low water absorption. As AR/VR optical lenses, they can effectively achieve the lightweighting of AR/VR devices while providing beneficial optical performance. With the rapid development of AR/VR and breakthroughs in domestic COC/COP industrialization, the space for domestic substitution of COC/COP is expected to gradually open up. 3) PI: AI technology is expected to accelerate the upgrade and replacement of consumer electronics and lead the high-end and diversified development of PI films. Domestic companies are accelerating independent research and development, breaking the overseas monopoly on high-performance PI films, making domestic substitution timely.

AI Empowers Leapfrog Development of the Chemical Industry.

In recent years, to break through bottlenecks and achieve high-quality development, chemical companies have actively seized new windows and opportunities for AI technology development, integrating AI technology into various aspects such as innovative research and development and production operations. In terms of innovative research and development, the integration of AI technology has triggered a transformation in the paradigm of basic chemical research from the traditional "experiment-theory-practice" to the "data-model-practice" model, which helps significantly shorten product development cycles, reduce R&D costs, and accelerate the industrialization of new materials. In terms of production operations, AI technology can effectively assist chemical companies in optimizing resource allocation, improving production efficiency, and enhancing safety operation capabilities through intelligent transformation and upgrades in smart control, smart production, and smart operations across multiple dimensions AI technology has gradually transformed the research and development, production methods, and industrial forms of the chemical industry, laying a solid foundation for enhancing independent innovation capabilities, optimizing industrial structure layout, and achieving safe, green, and high-quality development. In the long run, the application prospects of AI technology in the chemical industry are broad, and leading enterprises in various sub-sectors are expected to play a leading and demonstrative role, further consolidating their influence and competitiveness in the industrial transformation.

Investment Suggestions:

Under the impact of DeepSeek, the AI industry chain is expected to accelerate development, and high-end chemical new material production enterprises are likely to benefit from both the growth of terminal demand and the accelerated process of domestic substitution. Additionally, chemical companies that first deeply integrate with AI will also benefit.

On the AI computing power side, it is recommended to focus on high-end chemical new material companies such as cooling liquids for data center cooling systems and high-frequency PCB substrate materials PPO, including Juhua Co., Ltd. (600160.SH), Xinbang (300037.SZ), Yonghe Co., Ltd. (605020.SH), and Shengquan Group (605589.SH).

On the AI application side, it is recommended to focus on high-end chemical new material companies such as lightweight materials PEEK for humanoid robots, optical lens materials COCICOP for VR/AR, and high-performance PI films in the consumer electronics field, including Zhongyan Co., Ltd. (688716.SH), Akroly (603722.SH), Kingfa Sci. & Tech. (600143.SH), and Ruihuatai (688323.SH).

Risk Warning

Risks of significant raw material price increases, risks of downstream demand being lower than expected, risks of project production not meeting expectations, and risks of intensified international trade friction, etc