Summary of the Conference Call on Synthetic Quartz for Photomasks Industry Overview - The synthetic quartz material for photomasks has a limited annual demand of less than 200 tons, with domestic prices around 350-400 RMB per kilogram and imported prices exceeding 1,000 RMB per kilogram. Major suppliers include Japan's Shin-Etsu, South Korea's SS, and IGC [1][2] - Domestic advanced process synthetic quartz materials are heavily reliant on imports, with foreign total production capacity around 20,000 tons, 40% of which is supplied to China. Domestic ordinary process capacity is about 2,000 tons, mainly provided by companies like Fihua and Changfei [1][3] Key Points and Arguments - The price of synthetic quartz materials has risen due to strong downstream demand, particularly for blank masks. The domestic advanced process still depends on Japanese and Korean imports, which has contributed to the price increase [1][5] - Current domestic prices for synthetic quartz materials are stable at 350-400 RMB per kilogram, but prices for high-end processes are expected to continue rising due to ongoing reliance on imports [1][8] - In the overseas market, prices for synthetic quartz materials used in advanced processes (28nm and below) are currently over 1,000 RMB per kilogram and are expected to continue rising due to strong demand [1][9] Production and Supply Chain Insights - Domestic companies like Fihua and Changfei are pushing for localization but face challenges in mass production and customer validation. Short-term reliance on foreign suppliers is expected to continue [1][11] - New Moon Company plans to add 8,000 tons of capacity in China, expected to be operational by the second half of 2026, which may impact the market but will not immediately change the competitive landscape dominated by foreign suppliers [1][13] - The production process for synthetic quartz substrates involves chemical vapor deposition (CVD) or silicon oxide deposition, which requires high purity and advanced technology [1][6] Challenges and Market Dynamics - Domestic production is limited by the inability to produce high-purity synthetic sand, which is a significant bottleneck. If this issue is resolved, the transition from synthetic sand to final products would not face technical barriers [1][28] - The market is currently characterized by a B2B sales model with minimal involvement of intermediaries, and companies typically maintain a safety stock of around three months [1][15][16] - The domestic market's demand for natural quartz products is approximately 80%, while synthetic quartz products account for about 20%. The demand for synthetic quartz is expected to increase significantly with advancements in semiconductor processes [1][23] Future Outlook - The profit margins for synthetic quartz materials are relatively high, estimated between 50% to 60%, while mature process products have lower margins of about 30% to 40% [1][25] - The overall market demand for synthetic quartz materials is growing, with current production capacity insufficient to meet future needs, which could reach 16,000 tons [1][24] - The enhancement of domestic production capabilities is a strategic goal, but achieving significant localization will take time and may not immediately alter the existing supply-demand dynamics [1][14]

Core Application and Market Position - Synthetic quartz materials are essential in the semiconductor industry, directly impacting chip manufacturing precision and yield [2] - In semiconductor manufacturing, synthetic quartz plays an irreplaceable role in three key areas due to its excellent optical properties, low thermal expansion coefficient, and outstanding chemical stability [4][6] - The global market for photomask substrates, which utilize synthetic quartz, is approximately $5-6 billion, with the Chinese market reaching 10 billion RMB, accounting for one-third of the global share [10] Technical Characteristics and Cost Structure - Synthetic quartz must meet extreme technical specifications, including a transmittance of over 99.5% at 193nm wavelength and a low thermal expansion coefficient below 5×10⁻⁷ /℃ [14][15] - The cost structure analysis reveals that advanced lithography machines consume 500 kg to 2 tons of synthetic quartz, leading to raw material costs of 750,000 to 3 million RMB per machine [16] - The material loss rate during processing is high, ranging from 25% to 33%, significantly affecting the cost structure of semiconductor equipment [16] Global Landscape and Domestic Production Status - The global synthetic quartz market is characterized by an oligopolistic structure, with four companies controlling over 80% of the high-end market share [21] - The domestic production rate for synthetic quartz materials is approximately 20%, with significant variations across different segments [22] - In high-end sectors, such as DUV and EUV lithography, domestic production has not yet achieved scale, relying heavily on imports [23] Competitor Analysis - International giants like Heraeus, Tokuyama, and Corning have established strong technical advantages in synthetic quartz, with unique strengths in product uniformity and defect control [26][27] - Domestic leaders like Feilihua and Shenguang are making strides in the market, with Feilihua holding about 25% of the domestic photomask market [28] Domestic Production Progress and Future Outlook - The domestic synthetic quartz material production is accelerating due to policy and market drivers, with significant support from national technology initiatives [32] - Different fields show varied progress in domestic production, with the optical inspection equipment sector seeing rapid growth [33] - Future projections indicate a potential increase in domestic production rates for mature processes from 50% to over 80%, while high-end materials for DUV lithography may rise to around 30% [34]