According to the Zhitong Finance APP, Dongfang Securities has released a research report stating that several domestic companies with leading resin synthesis technology have entered the high-end electronic resin field. Some products have already achieved large-scale sales to leading domestic and foreign copper-clad laminate manufacturers and have entered the supply chain of mainstream terminal manufacturers. In the future, they are expected to contribute considerable profits as terminal servers ramp up production. The firm recommends paying attention to Dongcai Technology (601208.SH), which started with insulation materials and is expanding into electronic resin business, as well as SQ Group (605589.SH), which leads in domestic phenolic resin synthesis technology.
<h2>The main points of Dongfang Securities are as follows:</h2>
The explosion in AI server demand brings opportunities for domestic high-speed resin material localization
The development of AI large models relies on high-performance hardware support, which in turn has led to a demand for high-performance new materials. Due to the higher signal transmission rate requirements of AI servers, the materials used in their copper-clad laminates need to meet higher electrical performance standards. Ordinary epoxy resins can no longer serve as their insulating substrates, and low-dielectric resin materials such as polyimide, PPO, and hydrocarbon resins have been chosen by downstream and mainstream terminal manufacturers as substrates for high-speed copper-clad laminates. Although China started late in this type of resin material field, companies in the US and Japan have benefited from the early layout of the downstream PCB industry and industrial transfer, thus possessing leading technology and implementing monopolies in the upstream resin material sector. However, the firm believes that with the explosion in AI demand, leading companies that have laid out relevant resin synthesis technologies in advance have gained opportunities for a turnaround.
For the localization of new materials, both technical capability and market opportunities are indispensable, especially in the electronic materials field. Due to the high stability requirements for material quality in electronic devices, downstream manufacturers and upstream material suppliers are often deeply bound. If terminal demand lacks explosive opportunities, it is very difficult to enter the supply chain of mainstream terminal manufacturers, which is not just a matter of technical capability. The explosive demand from AI has instead provided domestic resin manufacturers with opportunities to enter and accelerate their development. The development of AI servers has brought about upgrades or changes in copper-clad laminate technology routes, leading to an increasing share of Taiwanese and mainland high-speed copper-clad laminate manufacturers that are more open to supplying domestic material suppliers. On the other hand, the rapid growth in demand may also lead to technological and supply spillovers in the upstream and downstream industrial chains due to insufficient capacity, giving domestic resin material suppliers opportunities to enter and grow, and they are expected to achieve volume growth through their own R&amp;D accumulation and quality customer resources.
The demand space for high-speed resins is large
The incremental demand for high-speed resins mainly comes from GPU modules of AI servers and PCB boards for supporting switches and optical modules, as well as high-speed CPU motherboards upgraded from ordinary servers. With the continuous increase in transmission rates, not only is the unit value of resins continuously rising, but the structural requirements of multilayer boards have also increased the resin usage per server. According to demand space estimation results, the future demand for resins used in high-speed copper-clad laminates will be at least in the tens of thousands of tons. Assuming a price of 500,000 yuan per ton, the market size is expected to be around 3 billion yuan by 2026, while the actual unit value of high-grade resins may be even higher. The resin market size will continue to expand alongside the ramp-up and upgrade of future AI servers
Domestic Leading Resin Synthesis Technology Enterprises Have Gradually Entered the Market
Domestic leading resin companies represented by EMT and SQ Group have made early layouts in the high-speed resin field and have gradually entered the industrial chain of downstream mainstream manufacturers. EMT started with insulation materials and mastered some synthesis technologies for insulating resins early on. In the field of high-speed resins, active esters and bisphenol resins have formed a scale production capacity of thousands of tons, achieving large-scale sales of multiple high-speed resin products. Additionally, it has planned a project for the annual production of 20,000 tons of electronic materials for high-speed communication substrates to further improve its industrial chain layout in the electronic materials sector. SQ Group's phenolic resin synthesis technology is domestically leading, which has extended into the electronic chemicals business, laying out multiple high-speed resin materials. The commercially mass-produced high-speed M8 level materials include super hydrocarbon resins and modified polyphenylene ether, with a maximum production capacity of 1,500-1,800 tons, and plans for thousand-ton level projects for PPO/OPE resins, hydrocarbon resins, and BMI resins. Under the triple conditions of technology + customers + market, this institution is optimistic about the growth opportunities for domestic leading resin companies in the field of high-speed copper-clad laminate materials.
Risk Warning
Downstream demand growth and technological iteration may fall short of expectations; project production may not meet expectations; progress in high-speed resin technology research and development may not meet expectations; risks of downstream and terminal technology iteration; risks of core customer certification and supply; changes in assumptions may affect calculation results

601208

605589

Dongfang Securities released a research report, believing that leading domestic resin companies have growth opportunities in the field of high-speed copper-clad laminate materials, recommending attention to EMT and SQ Group. With the explosion of demand for AI servers, the localization opportunities for domestic resin materials have increased, especially with the rising demand for high-performance new materials. Although the domestic industry started relatively late, leading companies are expected to achieve a catch-up driven by both technological and market opportunities

Zhitong

SQ Group

DFZQ

Dongfang Securities: Optimistic about the development opportunities of high-speed copper-clad laminate resin materials, recommends paying attention to EMT and SQ Group