[Huaxi Machinery] Strong Call Solder Paste Duo

[West China Machinery] Continues to Strongly Call the Two Heroes of Solder Paste: Solder Paste, or the Next “Electronic Cloth” Recently, we released an in-depth report on the solder paste industry. The leadership’s attention to it is relatively high. Solder paste may be the next “electronic cloth,” and the price elasticity of material costs is still being significantly underestimated.

1. The evolution of optical communication technology and demand for the solder paste industry are set to surge. As optical module transmission speeds increase, the solder paste industry is expected to see both volume and price rise.

1. Volume: The double logic behind increased solder paste usage—changes in the number of optical modules and high-speed optical module packaging processes lead to a surge in the number of solder joints. As optical module speeds evolve from 400G to 1.6T and beyond, the number of solder joints on PCBA grows rapidly. Precision processes will evolve from eutectic soldering and laser welding to gold wire bonding, flip-chip bonding, and others.

2. Price: Higher-grade solder paste costs more, and demand from high-speed optical modules for higher-grade solder paste is increasing (the T4 price is only 1.5 yuan/g, while T7 exceeds 18 yuan/g).

3. Estimation: Considering both volume and price growth, the solder paste market is expected to expand from the 4 billion yuan market space in 2020, quickly more than tenfold in capacity expansion—changes are expected to be seen this year. The market is gradually learning to recognize the logic, but the price elasticity is still significantly underestimated.

2. The solder paste industry is trending toward higher-end products, and demand from high-speed optical modules for fine solder paste is rigid. The overall solder paste industry shows three aspects of going higher-end:

1. Finer: Some technology-leading enterprises have begun mass using T5 solder alloy powder with a smaller powder particle size, and are gradually shifting toward smaller-particle T6 and T7 grades. Meanwhile, as high-speed optical modules evolve to 1.6T CPO and so on, demand for high-end solder paste is rigid.

2. Greener: Approaches such as halogen-free solder materials.

3. Lower-temperature: Alloy processes involving Bi and In.

3. The competitive landscape for solder paste is favorable, and leading players are expected to fully benefit. Solder paste is difficult to develop, especially in terms of formulation and process; at present, the domestic substitution rate is only around 30%. In recent years, companies such as Weiteou have already developed T7-level solder paste, and according to our grassroots survey, they are actively connecting with leading optical module enterprises, with progress being very fast. Leading players are expected to fully benefit.

Among A-share listed companies, there are only two companies with solder paste strength: #唯特偶（锡膏龙头）、# Huaguang New Materials (a copper-based liquid cooling leader, with rapid progress in solder paste).