Investment Rating - The report maintains an "Outperform" rating for the semiconductor mask industry, particularly focusing on domestic manufacturers entering a new phase of development [1]. Core Insights - The mask is a critical material in microelectronics manufacturing, directly impacting the yield of downstream products. The semiconductor wafer manufacturing materials market reached $32.2 billion in 2019, with masks accounting for approximately 13% of costs [3]. - China is the largest panel production base globally, with over 60% of the world's capacity. However, the mask market is still dominated by US and Japanese manufacturers, with domestic players like Qingyi Optoelectronics and Luwei Optoelectronics gradually increasing their market penetration [3]. - The domestic semiconductor mask market is projected to reach approximately 18.7 billion RMB in 2025, with wafer manufacturing masks expected to account for 10 billion RMB [3]. - Investment recommendations include Qingyi Optoelectronics (strong buy), Luwei Optoelectronics (watch closely), and Longtu Photomask (watch closely) [3]. Summary by Sections Section 1: Mask Production and Market Dynamics - The mask production process has high technical barriers, and the market is vast with low domestic penetration. High-end masks require advanced equipment and material support [5][6]. - The semiconductor mask industry is closely tied to the growth of downstream sectors, with masks representing about 12% of the semiconductor materials market [74]. Section 2: Market Size and Growth Projections - The global semiconductor materials market is expected to reach $67.5 billion in 2024, with a projected growth rate of 3.8% [77]. - The domestic semiconductor mask market is anticipated to grow significantly, with a forecast of 18.7 billion RMB in 2025, driven by increasing demand in wafer manufacturing and packaging [80]. Section 3: Competitive Landscape - The independent third-party mask manufacturers are expected to gain market share as the disadvantages of self-built mask factories become apparent. Currently, independent manufacturers hold about 35% of the market, with major players being Photronics, Toppan, and DNP [83]. - Domestic manufacturers like Qingyi Optoelectronics and Luwei Optoelectronics are gradually increasing their market presence, although their overall revenue remains relatively low compared to international competitors [86].