Summary of Glass Fiber Industry Conference Call Industry Overview - The glass fiber industry is expected to see a recovery in 2025, driven by significant demand from wind power installations, which are projected to increase by 138 GW globally, alongside strong performance in the electric vehicle and home appliance markets. However, demand from the construction sector has decreased to around 20% of total demand [1][5] - Exports saw a slight decline in the first three quarters of the year, but there was improvement in September. The demand for roving is expected to remain resilient in 2026, with stable growth in automotive demand and sustained high demand in wind power [1][5] Key Insights and Arguments - The net production capacity of domestic roving has increased by approximately 300,000 tons, with leading companies expected to maintain good profitability levels for high-end products. Overall, roving prices are anticipated to remain stable [1][2] - New production capacity for ordinary electronic yarn is expected to come primarily from Jushi Huai'an and International Composites, totaling around 100,000 tons, but the net increase will be limited. The supply-demand balance for ordinary electronic yarn is expected to remain favorable, with prices potentially stabilizing or even increasing [1][2] - Specialty electronic fabrics are benefiting from advancements in AI and high-speed communication technologies, with low dielectric and low thermal expansion coefficient materials seeing significant demand. These materials are widely used in AI servers, high-end switches, and Apple devices [1][7] Market Dynamics - The demand for low thermal expansion electronic fabrics is projected to increase significantly, with Nitto Denko planning to triple its production capacity by the end of next year, indicating a substantial market opportunity [3][9] - Domestic companies such as China National Materials, Honglu Technology, and Jushi have a leading advantage in the specialty electronic fabric sector and are actively expanding production and achieving technological breakthroughs [3][4][14] Price and Profitability Outlook - Prices for specialty electronic fabrics are expected to remain high or even increase, driven by strong demand for second-generation and low thermal expansion products. The market has high expectations for the price and volume of specialty electronic fabrics [11][12] - The overall profitability of the industry is expected to remain good, with limited new production capacity and stable prices anticipated for traditional glass fiber products in 2026 [15] Competitive Landscape - The industry has a few key players capable of mass-producing specialty electronic fabrics, primarily from Japan and Taiwan, but domestic companies are rapidly catching up. For instance, China National Materials plans to significantly increase its production capacity, while Honglu Technology and others are also expanding [14] - The competitive landscape is evolving, with domestic firms expected to gradually increase their global market share [14] Future Outlook - The overall industry outlook for 2026 is positive, with traditional glass fiber demand showing growth potential and limited new capacity. The increase in GB300 shipments is expected to drive significant demand for second-generation and low thermal expansion products, contributing to a favorable industry environment [15]

Investment Rating - The report maintains an "Outperform" rating for the building materials industry [1]. Core Views - The traditional fiberglass industry is experiencing a price recovery and improved profitability, while the specialty fabric sector is benefiting from high demand driven by AI technology [4]. - The report highlights the structural recovery of the fiberglass industry in 2025, with a focus on the resilience of demand in key sectors such as wind energy and automotive [3][4]. Summary by Sections Traditional Fiberglass - The industry is set to undergo three rounds of slight price recovery starting in 2024, with a structural rebound in profitability expected in 2025. The demand for roving is driven by high growth in wind power installations and positive trends in new energy vehicles and home appliances, although construction and export demand remain weak [3]. - By the end of 2025, the domestic roving capacity is expected to increase by 460,000 tons per year, but the growth rate of capacity is anticipated to slow down due to more rational competition among companies and reduced capital expenditures in recent years [3][4]. - The profitability of listed fiberglass companies is projected to improve significantly, with a reported net profit of 4.79 billion yuan in the first three quarters of 2025, a year-on-year increase of 49% [9]. Specialty Electronic Fabrics - The demand for specialty electronic fabrics is experiencing a boom due to the rapid development of AI and high-frequency communication technologies. The strong growth in AI computing power is driving the demand for high-performance PCBs and chip packaging substrates [3][4]. - The global AI server shipment is expected to grow at a CAGR of 28.8% from 2022 to 2026, with significant increases in the demand for low dielectric electronic fabrics that meet the high-performance requirements of AI servers and switches [3][52]. - Domestic companies are rapidly catching up in the specialty electronic fabric market, with significant capacity expansions planned. For instance, China National Materials Technology plans to expand its production capacity by 94 million meters annually by 2025 [3][4]. Investment Recommendations - The report suggests focusing on companies such as China National Materials Technology, Honghe Technology, China Jushi, Feilihua, and International Composites, which are well-positioned to benefit from the recovery in the fiberglass industry and the growth in specialty electronic fabrics [4].

Group 1 - The rapid development of AI computing power is driving the upgrade of PCBs towards high-frequency and high-speed applications, leading to an explosion in demand for specialty electronic fabrics [3][5] - Specialty electronic fabrics are high-performance woven materials that optimize chemical composition and manufacturing processes to achieve specific electrical, thermal, or mechanical properties, supporting high-frequency signal transmission and reducing energy loss [3][10] - The market for AI/HPC server PCBs (excluding packaging substrates) is expected to grow at a CAGR of 32.5% from 2023 to 2028, significantly higher than other sectors [3][10] Group 2 - Low-DK electronic fabrics, characterized by low dielectric constant (DK) and low dielectric loss (DF), are crucial for AI servers and data center switches, enhancing signal efficiency in high-frequency environments [10][11] - The demand for Low-DK fabrics is projected to grow rapidly in 2024, driven by the transition to low-dielectric PCBs in AI server architectures and the global data center upgrade [10][11] - The global Low-DK electronic fabric market is expected to exceed $200 million by 2025 and reach $530 million by 2031, with a CAGR of 18.7% [11][16] Group 3 - Quartz fiber fabric (Q fabric), a high-performance material, is expected to see strong demand growth due to its application in advanced packaging technologies for AI hardware and data center switches [12][19] - The third-generation low-dielectric electronic fabric, Q fabric, utilizes high-purity silica to achieve ultra-low dielectric constant and loss, presenting significant technical barriers to mass production [12][19] - The core mission of Low-CTE electronic fabrics is to address thermal management issues in advanced chip packaging, with demand surging due to the explosive growth of AI computing power [19][20] Group 4 - Domestic manufacturers are accelerating capacity expansion in the specialty electronic fabric sector, responding to the growing demand from AI computing power upgrades [22][24] - Key suppliers of specialty electronic fabrics include Japanese, Taiwanese, and mainland Chinese companies, with domestic firms rapidly increasing production capabilities to meet market needs [22][24] - The competitive advantage of specialty electronic fabric suppliers lies in their ability to quickly innovate product performance and scale up production [22][24]

Group 1 - The glass fiber market is expected to face supply-demand pressure in 2025, but price fluctuations will be limited due to enhanced consensus on price stability among companies [1] - From 2026 onwards, supply-demand relationships are expected to marginally improve as new supply is gradually digested and competition shifts towards high-value areas [1] - Investment strategies in the glass fiber industry will focus on two main lines: stable pricing for mid-to-low-end products and structural opportunities in high-end products like specialty electronic fabrics [1] Group 2 - The demand for glass fiber is projected to grow by 6.4% in 2025, driven by wind power installations and lightweight materials for new energy vehicles, despite a supply growth of 9.3% [2] - The ordinary electronic yarn market is expected to see steady growth, with demand projected at 151,000 tons in 2025 and 159,000 tons in 2026, reflecting a growth rate of 5.4% [3] - The competition in the glass fiber industry is shifting from low-end to high-end, with leading companies like China Jushi focusing on high-value segments and stabilizing cash flow through collaborative pricing strategies [4]