In recent years, the global semiconductor materials industry has experienced rapid expansion, becoming a strategic high ground in international technological competition. Breakthroughs in third-generation semiconductor materials (silicon carbide/SiC, gallium nitride/GaN) have overcome the limitations of traditional silicon-based materials, driving innovation in high-tech sectors such as new energy vehicles and 5G communications. In March 2025, Grant Thornton released its latest report, Grant Thornton Consulting Industry Insights: Semiconductor Industry Research - Semiconductor Materials, highlighting tangible breakthroughs in domestic material production while warning that "choke point" risks persist in core supply chain segments.
The semiconductor materials market exhibits cyclical fluctuations, with demand anticipated to rebound in 2025.
According to data from SEMI (International Semiconductor Industry Association), weakened end-market demand in 2023 reduced fab capacity utilization rates, leading to a contraction in the semiconductor materials market. By 2025, however, as the industry enters a new cycle driven by growing demand from AI, consumer electronics, and automotive sectors, semiconductor material consumption is projected to exceed 2022 levels.
During the 2021-2022 industry downturn, semiconductor materials suppliers faced extended accounts receivable and inventory turnover days, increasing working capital pressure and straining cash flows. With the semiconductor sales recovery in 2024, these companies reduced inventory turnover days and accounts receivable days in the first three quarters of 2024.
The semiconductor materials sector is characterized by multi-variety, small-batch production with stringent requirements for stable supply, making production capacity a critical competitive differentiator. Companies in capacity-expansion phases require sustained capital/technical investments; their profitability remains constrained short-term due to high depreciation costs and limited economies of scale.
While China has achieved breakthroughs in material localization, it still relies heavily on Japanese imports. Japan commands 52% of the global semiconductor materials market, leading in 14 of 19 critical categories—including silicon wafers, photoresists, and CMP materials. China’s localization progress shows stratified results:
Advanced Localization (>30%):
8-inch silicon wafers, polishing fluids, lead frames
Key Gaps (<20%):
12-inch silicon wafers, photoresists, electronic gases, wet chemicals
Domestic leaders have made strides, but significant room for improvement remains.
