Northeast Securities: Silicon Micro powder Opens a New Narrative of Simultaneous Price and Volume Increase, Domestic Substitution Enters a High-Stage Expansion Period

Northeast Securities releases a research report stating that as the performance of main materials approaches the limit, the strategic position of silica micro-powder in copper-clad laminates (CCL) has significantly increased, shifting from traditional fillers to core materials. Technological upgrades are driving product iterations from angular powders to spherical powders and advanced chemical powders, with per-ton value increasing exponentially. Domestic companies represented by Lianrui New Materials have broken the Japanese monopoly, achieving breakthroughs in sphericalization and low α-ray control, leveraging near-field and customized advantages to accelerate substitution, and are expected to fully secure high-end markets within the next three years.

Northeast Securities’ main points are as follows:

As main material performance nears the limit, the importance of silica micro-powder significantly increases

In the traditional cost structure of copper-clad laminates (CCL), copper foil, resin, and fiberglass cloth have long accounted for a high proportion of the main materials. With the explosive demand for AI servers and high-speed communications, substrates are evolving toward high-frequency and high-speed (M9 and above) levels. The physical modification space for the three main materials in low dielectric (Low Dk/Df) and ultra-low thermal expansion coefficient (CTE) is gradually approaching physical limits. In pursuit of ultra-low dielectric loss (Low Df) and CTE, silica micro-powder (filling ratio about 15%), previously regarded only as a cost-reducing filler, is becoming a key variable to break performance bottlenecks. When main material performance approaches the limit, the purity, particle size, and morphology of silica micro-powder directly determine signal transmission integrity. Its strategic position has risen from a passive additive to a core material that determines substrate grade, with high-performance spherical silica powder filling ratios expected to increase to 40% year by year.

Technological upgrades significantly boost profitability and cost proportion

Silica micro-powder is undergoing an upgrade from physical to chemical methods (VMC / sol-gel), leading to exponential growth in per-ton value. Traditional angular powders are produced by mechanical crushing, with very low technical barriers, and cost only a few thousand yuan per ton. As demand for high-performance substrates increases, spherical silica micro-powder produced via physical flame methods, with its high flowability and high filling rate, has seen its unit price rise gradually to the ten-thousand-yuan level per ton. For supporting substrates for AI chips and applications above M8, high-end powders with extremely low α-ray emissions and sub-micron particle sizes, produced via advanced chemical methods, have seen their prices soar per ton. The high-end product structure will drive a significant increase in net profit margins.

Japanese monopoly broken, domestic substitution enters a high-volume phase

The global high-end silica micro-powder market for CCL has long been dominated by Japanese companies such as Denka and Nippon Steel, which, with their early chemical synthesis processes, hold pricing power in the high-frequency and high-speed sectors. Currently, domestic substitution has shifted from purely low-cost strategies to supply chain security and synchronized development. Leading domestic companies like Lianrui New Materials have achieved key breakthroughs in sphericalization technology and low α-ray control, successfully integrating into the supply systems of global top CCL suppliers like Shengyi Technology and Nanya New Materials. Relying on the near-field advantages of domestic AI computing clusters and high-end PCB industry clusters, domestic manufacturers are accelerating penetration through customized R&D. Lingwei Technology, with deep expertise in silica for matting applications and sol-gel technology, is leveraging its early-mover advantage in liquid-phase synthesis to accelerate into high-purity electronic-grade silica micro-powder. Its chemical process can precisely control powder purity and particle size, highly matching the demanding requirements of ultra-high-frequency substrates like M8 and M9 for sub-micron fillers. As domestic chemical synthesis capacity gradually comes online, domestic silica micro-powder is expected to fully secure a core position from edge filler to key supplier within the next three years.

Risk tips: Policy progress below expectations; downstream demand below expectations.