Minsheng Securities: Strong Growth Momentum for Semiconductor Masks, Urgent Need for Breakthrough in Domestic Production of Blank Masks

According to the report released by Minsheng Securities, based on data from SEMI and CEMIA, the global semiconductor mask market is expected to reach USD 6.079 billion by 2025, with a year-on-year growth of 7%. The market size of semiconductor masks in mainland China has grown rapidly, increasing from USD 912 million in 2017 to USD 1.556 billion in 2022, with a compound annual growth rate of 11.3% from 2017 to 2022. As mainland China continues to make breakthroughs in advanced process fields, the mask market is expected to further expand, bringing significant opportunities for domestic manufacturers. The blank mask, as a major cost component of optical masks, is of great significance for the autonomy and controllability of the entire semiconductor industry chain.

The main points of Minsheng Securities are as follows:

Masks are a key step in the autonomy and controllability of semiconductor materials

Masks are indispensable materials in the semiconductor manufacturing process. Their basic working principle is to transfer the designed circuit patterns onto the mask through photolithography and etching processes, and then transfer the circuit patterns carried by the mask onto substrate materials such as silicon wafers through exposure. Semiconductor masks are the category of masks with the highest technical requirements and also the largest application market for masks, with IC manufacturing accounting for 60% of the downstream mask market. High-end semiconductor masks are mainly monopolized by manufacturers from the United States, Japan, and South Korea, so breakthroughs in domestic production are of significant strategic importance for the domestic semiconductor industry chain.

The global mask market has vast potential and strong growth momentum

As one of the core semiconductor materials, semiconductor masks accounted for 12% of the global semiconductor materials market in 2021, second only to silicon wafers and electronic specialty gases. According to data from SEMI and CEMIA, the global semiconductor mask market is expected to reach USD 6.079 billion by 2025, with a year-on-year growth of 7%. The market size of semiconductor masks in mainland China has grown rapidly, increasing from USD 912 million in 2017 to USD 1.556 billion in 2022, with a compound annual growth rate of 11.3% from 2017 to 2022. As mainland China continues to make breakthroughs in advanced process fields, the mask market is expected to further expand, bringing significant opportunities for domestic manufacturers.

Blank masks are the core component of semiconductor masks

Blank masks and optical masks can be compared to film before and after taking a photo. The basic structure of a blank mask is a layer of optical film coated on a glass panel, with materials including chromium, molybdenum silicide, and silicon dioxide. With the development of semiconductor technology, high-definition optical masks are needed to form fine patterns, along with corresponding blank masks. Blank masks are the main cost component of optical masks. According to the prospectus of mask manufacturer Longtu Photomask, the proportion of blank masks in raw material procurement from 2021 to 2023 was 64%, 58%, and 53%, respectively. According to Minsheng Securities' estimates, the global blank mask market size is about USD 1.8 billion in 2024, with the mainland China market size about USD 400 million.

The blank mask urgently needs to achieve breakthroughs in domestic production

Japanese manufacturers occupy the main market share of global blank masks, including globally renowned electronic chemical giants such as HOYA, Shin-Etsu, and AGC. Among them, HOYA holds a dominant position in the EUV blank mask market, with the remaining market occupied by another supplier In the DUV blank mask market, HOYA also holds a major share. Other regional manufacturers such as S&S Tech and SKC from South Korea are also catching up. Mainland Chinese manufacturer Juhe Materials plans to enter the blank mask field by acquiring relevant businesses from South Korea's SKE, aiming to fill the gap in high-end blank masks domestically. As a major cost item of optical masks, the localization of blank masks is of great significance for the autonomy and controllability of the entire semiconductor industry chain.

Target Aspects

Recommended to pay attention to: Juhe Materials (688503.SH) (plans to layout blank mask business through the acquisition of SKE), Longtu Photomask (688721.SH), Luvi Optoelectronics (688401.SH), SQM (688138.SH), etc.

Risk Warning

Technology iteration risk, supply chain risk, market competition risk