Core Viewpoint - The article emphasizes the critical role of photomasks in semiconductor manufacturing, highlighting the high costs associated with producing advanced chips and the significant market opportunities for domestic players in China due to foreign monopolies in the photomask industry [2][3][4]. Group 1: Industry Overview - The photomask industry is a nearly $10 billion market, with over 50% of the market share controlled by Japanese companies, particularly in high-end EUV photomasks, which are completely banned from export to China [3][4]. - The photomask serves as a bridge between chip design and manufacturing, directly impacting chip performance and yield, with costs for a single advanced photomask reaching up to $750,000 [2][3][27]. Group 2: Technical Barriers - The industry is characterized by high capital and technical intensity, creating significant barriers to entry for new players [12]. - Key technical challenges include handling non-standard data from various chip design companies, ensuring precise overlay accuracy across multiple mask layers, and managing exposure control during the lithography process [15][20]. Group 3: Market Dynamics - The global market for photomasks is projected to grow at a CAGR of 9.07%, indicating a robust demand driven by advancements in semiconductor technology [60]. - The article outlines the evolution of photomask technology from traditional methods to advanced techniques like OPC and EUV, which significantly increase the value of individual photomasks [27][43]. Group 4: Domestic Players and Opportunities - Domestic companies like Longtu Photomask and Qingyi Optoelectronics are making strides in the photomask market, with Longtu focusing on high-end semiconductor applications and Qingyi covering a broader range of products [72]. - The article suggests that the path to domestic substitution involves self-sufficiency in materials, breakthroughs in equipment, and collaboration across the supply chain [62]. Group 5: Challenges and Risks - The industry faces risks from geopolitical tensions, particularly regarding reliance on Japanese and Korean suppliers for critical materials, which could disrupt the entire semiconductor manufacturing process in China [73]. - The potential for new entrants in the domestic market could lead to price wars, impacting profitability for existing players [73].

Industry Overview - The global and domestic wafer production lines have been expanding, creating significant growth opportunities for the semiconductor mask industry [2] - The semiconductor photomask market is highly monopolized by companies from the US and Japan, with self-owned mask factories of wafer manufacturers holding 66% of the market share in 2022 [2] - Key materials required for mask production, such as substrates, photoresists, and optical films, are also dominated by foreign companies [2] Domestic Market Dynamics - In the context of international trade tensions and the reverse globalization of the semiconductor industry, accelerating domestic substitution has become a national strategic priority [3] - Domestic manufacturers have made progress in the mid-to-low-end product market of photomasks and need to enhance R&D capabilities to catch up with overseas competitors [4] Photomask Functionality and Types - Photomasks play a crucial role in microelectronics manufacturing by transferring circuit designs onto substrates or wafers, directly impacting the yield of downstream products [5] - Photomasks can be categorized into quartz masks, soda masks, and other types, with quartz masks widely used in flat panel display and semiconductor manufacturing [5] Industry Chain Analysis - The photomask industry chain consists of upstream supply, midstream manufacturing, and downstream applications, with a wide range of end-use sectors including consumer electronics, home appliances, automotive electronics, and IoT [6] Market Prospects - The photomask manufacturing industry has high entry barriers due to its capital and technology intensity, with equipment prices ranging from tens of millions to over a hundred million [8] - The global photomask market has been growing steadily, reaching $5.2 billion in 2022, while the Chinese market is also expanding, with a projected market size of 12.436 billion yuan in 2023 [8] Domestic Substitution Potential - There is significant potential for domestic substitution in the semiconductor materials sector, with the import value of integrated circuit products in China reaching $154.61 billion in the first half of 2020 [11] - The domestic photomask market is expected to approach 10 billion yuan in the flat panel sector over the next 3-5 years, with a current domestic substitution rate of about 20% [11] Listed Companies in Photomask Sector - Qingyi Optoelectronics (688138) is one of the earliest and largest domestic photomask manufacturers, focusing on R&D, design, production, and sales [12] - Luvi Optoelectronics (688401) has developed into the only domestic photomask company capable of covering all generations from G2.5 to G11, providing comprehensive services for flat panel manufacturers [15] - Longtu Photomask (688721) is a rare independent third-party semiconductor photomask manufacturer, focusing on technology development and product iteration for specialty process semiconductors [17]

Core Viewpoint - The article discusses the current state and future prospects of the photomask industry, highlighting the challenges faced by domestic companies in China and the potential for growth driven by increasing demand in downstream applications such as semiconductors and flat panel displays [2][3][4]. Group 1: Photomask Industry Overview - Photomasks are critical materials in microelectronics manufacturing, serving as templates for transferring circuit designs onto substrates or wafers [2][5]. - The global photomask market has been growing steadily, reaching a size of $5.2 billion by 2022 [2]. - The domestic photomask industry in China is currently lagging, with reliance on foreign imports for upstream equipment and materials [3][35]. Group 2: Market Dynamics - The demand for photomasks is driven by the growth of downstream industries, particularly in consumer electronics and semiconductor manufacturing [35][48]. - The photomask industry exhibits a counter-cyclical property, where sales can increase during downturns in the panel industry as manufacturers invest in new product development [3][48]. - The semiconductor photomask market is dominated by companies from the US and Japan, with a significant portion of the market share held by firms like Intel, Samsung, and TSMC [3][4]. Group 3: Domestic Companies and Development - Domestic companies such as Qingyi Optoelectronics and Luwei Optoelectronics are making strides in the photomask sector, with advancements in technology and market share [4][30]. - The article emphasizes the importance of mergers and acquisitions for domestic firms to enhance their technical capabilities and compete with established international players [4][30]. - The shift of panel and semiconductor production capacity to mainland China presents an opportunity for local photomask manufacturers to grow [4][65]. Group 4: Technological and Market Trends - The photomask production process involves several complex steps, requiring high precision and advanced technology [17][21]. - The industry is witnessing a trend towards larger and more sophisticated display panels, which in turn increases the demand for advanced photomasks [52][65]. - The market for photomasks is expected to continue growing, with projections indicating a rise in the domestic market size from 7.412 billion yuan in 2019 to 12.436 billion yuan in 2023 [48][49].