Strategic Analysis of Tongcheng New Materials' Platform-Based Layout for Semiconductor Materials

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Tongcheng New Materials is a leading comprehensive new materials service provider in China, with stock ticker 688303.SS, listed on the Shanghai Stock Exchange in 2018. The company’s business covers three major areas:

[1][2].

Stage	Time Period	Core Business	Strategic Achievements
Phase 1 (1999-2019)	20 years	Rubber additives agency → independent production	Became the world’s top enterprise in market share of special phenolic resins for tires
Phase 2 (2020-Present)	To date	Strategic transformation to electronic materials	Became a domestic leader in photoresists through acquisitions and mergers

The company’s actual controller, Ms. Zhang Ning, holds more than 60% of the company’s shares through Tongcheng Investment (49.17%) and Virgin Holdings (13.38%), resulting in a concentrated and stable shareholding structure[1].

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2020 was a pivotal year for the company’s strategic transformation, as it entered the electronic materials track through two major acquisitions:

• Founded in 2004, it is a major domestic supplier of 8-12 inch integrated circuit photoresists in China
• Launched its first KrF photoresist in 2014, and entered domestic 12-inch production lines in 2017
• As of 2024, the company’s direct shareholding in Beijing Kehua has increased to 96.33%
• Product coverage: Full range including I-line, KrF, ArF, BARC, etc.
• Key customers: 13 12-inch customers and 17 8-inch customers including SMIC, Yangtze Memory Technologies, Huahong Semiconductor, Huali Microelectronics, etc.[1][3]

• The first local manufacturer of TFT-LCD Array photoresists in mainland China
• The largest domestic supplier of liquid crystal positive photoresists in China
• The production capacity of the Qianjiang plant was increased to 8,000 tons/year in 2023
• Its domestic market share rose to 25.9% in H1 2024, with a market share of over 55% in the largest panel factory
• The first domestic supplier to achieve localized production of photoresists for OLEDs[1][4]

The company’s layout in upstream raw materials is one of its core competitive advantages:

• KrF Resins
  : Full product coverage achieved, with mass production at the hundred-kilogram level in 2023
• Resin Production Capacity
  : The photoresist resin production line at the Zhejiang Shangyu base is under construction, with a planned hundred-ton capacity reserve expected to be achieved in 2025
• Strategic Investment
  : In 2024, the company introduced strategic investment from a well-known domestic photoresist enterprise to jointly develop about 20-30 high-end semiconductor photoresist resin products

Key Insight

: Unlike Nanda Optoelectronics, which conducts full-chain independent R&D, Tongcheng New Materials’ strength lies in extending its reach to upstream raw materials to achieve an integrated industrial chain layout. This vertical integration not only improves gross profit margin but also enhances supply chain resilience[3][5].

In May 2024, the company launched the

, marking a new stage in its platform-based strategy:

Project Element	Details
Capacity Plan	250,000 semiconductor chip polishing pads per year
Investment Amount	Signed cooperation agreement and started production line construction
Latest Progress	Completed production line construction and production verification in H1 2025, and successfully received orders for 8-inch and 12-inch polishing pads from key customers
Expected Revenue	Annual sales of nearly RMB 800 million after reaching full production[1][4][6]

This layout has transformed the company from a single photoresist supplier to an integrated materials supplier for the CMP segment, forming a competitive landscape with Dinglong Co., Ltd.

• PI Materials
  : Acquired 12% equity in Suzhou Jucui in 2022 to enter the polyimide field
• High-Purity Supporting Reagents
  : Officially mass-produced and shipped in H1 2024, achieving self-sufficiency in photoresist solvents

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Financial Indicator	2021	2022	2023	2024	H1 2025
Operating Revenue (RMB 100 million)	23.2	25.0	29.44	32.7	16.56
Net Profit Attributable to Shareholders (RMB 100 million)	-3.3	-3.0	4.07	5.17	3.51
Revenue Share of Electronic Materials	-	-	-	~27%	26.7%

: Operating revenue of RMB 2.523 billion, a year-on-year increase of 4.06%; Net profit attributable to shareholders of RMB 494 million, a year-on-year increase of 12.65%[4][6]

Time Period	Semiconductor Photoresist Revenue	Year-on-Year Growth Rate	Key Product Progress
H1 2024	RMB 128 million	54.43%	ArF began mass production and order acceptance
H1 2025	Nearly RMB 200 million	Over 50%	KrF achieved nearly 50% year-on-year growth, and new products such as ArF were put into production and scaled up
First Three Quarters of 2025	-	-	Maintained rapid growth momentum

: Achieved revenue of RMB 180 million in H1 2025, a year-on-year increase of 13.6%, with a domestic market share of approximately 29%, firmly ranking as the second-largest domestic supplier[4][5]

Capacity Project	Capacity Scale	Progress Status
Shanghai Photoresist and Supporting Reagents Project	11,000 tons of photoresists + 20,000 tons of supporting reagents	Partially completed
Qianjiang Plant Display Panel Photoresists	8,000 tons/year	Already in production
Zhejiang Shangyu Resin Production Line	Hundred-ton scale plan	Under construction, expected to be completed in 2025
CMP Polishing Pad Project	250,000 pieces/year	Production line completed, mass production and shipment already underway

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Through

(photoresists + core resins) and (semiconductor + panel photoresists + CMP polishing pads), the company has built a unique platform-based advantage:

“In terms of industrial synergy, the platform-based product layout allows the company to provide integrated material solutions for downstream wafer fabs, deeply participate in the process optimization of customers’ production lines, and form close industrial ecological binding with customers. This binding brings extremely high customer switching costs”[5]

Capability Dimension	Specific Performance
Product Stability	KrF photoresists have achieved large-scale and stable supply to major domestic 12-inch and 8-inch wafer fabs
Customer Trust	Products have passed strict production line verification by downstream wafer fabs, accumulating rich process data
Domestic Substitution Progress	Occupies a leading market share in the domestic KrF photoresist market, and is the largest mass-production supplier of deep-UV KrF photoresists in China[5]

• Independent supply of phenolic resins (the company’s founding business)
• Self-production and self-use of photoresist resins
• Independent development of high-purity supporting reagents

This integrated layout effectively avoids the risk of dependence on imported core raw materials, forming a

[3][5].

Indicator	2021	2022	2023	2024	First Three Quarters of 2025
R&D Expenses (RMB 100 million)	1.47	1.58	1.80	2.17	1.77
R&D Expense Ratio	6.32%	6.33%	6.11%	6.62%	7.02%

• The year-on-year growth rate of R&D expenses has remained above 7% for consecutive years, reaching 20.46% in 2024
• Nearly 50 photoresist projects are progressing steadily
• Established an R&D center in Europe focusing on EUV photoresist precursor technology[4]

Company	Characteristics of Photoresist Business	Advantage Areas
Tongcheng New Materials	Full coverage of semiconductor + panel photoresists	Largest revenue scale, most complete product line, strong large-scale supply capacity
Nanda Optoelectronics	Focus on ArF photoresists	Deep independent R&D gene, high gross profit margin (50%+) for precursor business
Jingrui Electronic Materials	I-line + KrF photoresists	DUV technology reserve, wet chemical synergy
Shanghai Xinyang	Platform-based layout	Strong performance growth momentum, with net profit increasing by 62.7% year-on-year in the first three quarters of 2025

Comparison Conclusion

: The three companies each have their strengths, but

when considering only photoresist products, Tongcheng New Materials has a better revenue scale and business layout

[3][5].

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1. Key Support from the Third Phase of the National Integrated Circuit Industry Investment Fund
   : Established in May 2024 with a registered capital of RMB 344 billion, focusing on difficult links in the chip industry chain - equipment and materials
2. New Regulation from MOFCOM on Japan
   : On January 7, 2026, the Ministry of Commerce of the People’s Republic of China initiated an
   anti-dumping investigation
   into imported dichlorosilane originating from Japan, directly catalyzing a comprehensive acceleration of the domestic substitution process for semiconductor materials
3. Impact of Japan’s Earthquake
   : The earthquake in Aomori Prefecture, Japan, caused the production capacity of its high-end photoresist factories to shut down, and the approval cycle for exports to China was significantly extended

1. Intensive Production of Wafer Fabs
   : Enterprises such as Huahong Group, UNIC, and SMIC have production capacities under construction/to be built
2. Increase in Procurement Ratio of Domestic Photoresists
   : Expected to rise to 40% in Q1 2026, with order scheduling extending to Q2[5]

• Stock Price Performance
  : Limit-up for three consecutive trading days from January 6 to 8, 2026; closing price of RMB 55.61 as of January 14, representing a
  77.84% surge
  compared to the closing price of RMB 31.27 on January 3, 2025
• Planning for H-Listed IPO
  : In January 2026, the board of directors passed a series of proposals for H-share issuance and listing, planning to list in Hong Kong
• Institutional Rating
  : Shanghai Securities gave an “Overweight” rating, predicting that the net profit attributable to shareholders from 2025 to 2027 will be RMB 560 million, RMB 683 million, and RMB 883 million respectively[4][6]

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Risk Type	Specific Content
Downstream Demand Fluctuations	The semiconductor, display panel, and tire industries are greatly affected by the international situation and macroeconomy
R&D Progress Risk	The high-end materials field has high barriers and long R&D cycles, and technological breakthroughs are uncertain
Customer Onboarding Risk	The expansion of new products and customer onboarding may not meet expectations
Raw Material Price Fluctuations	Fluctuations in the prices of raw materials such as phenolic resins affect gross profit margin
Intensified Competition	Enterprises such as Dinglong Co., Ltd. also layout in the fields of CMP polishing pads and photoresists

1. Profitability Gap
   : Compared with the 50%+ gross profit margin of Nanda Optoelectronics’ precursor business, there is still room for improvement in the gross profit margin of Tongcheng New Materials’ electronic materials business
2. EUV Photoresist Layout
   : EUV photoresists are the next-generation technological high ground. Although the company has established an R&D center in Europe, it is still in the early stage
3. Valuation Pressure
   : The current stock price corresponds to a PE ratio of approximately 36 times for 2025, requiring sustained growth to digest the valuation

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Evaluation Dimension	Weight	Score (1-10)	Weighted Score
Strategic Clarity	15%	9	1.35
Execution Capability	20%	9	1.80
Performance Growth Verification	25%	8.5	2.125
Competitive Advantage Barriers	20%	8.5	1.70
Market Space and Policies	10%	9	0.90
Risk Control	10%	7	0.70
Comprehensive Score	100%	-	8.575

Verification Dimension	Conclusion
✅ Strategic Logic	Clear - Taking photoresists as the core, extending to a platform-based layout for semiconductor materials
✅ M&A Integration	Effective - Achieved control of Beijing Kehua and Beixu Electronics, both contributing to performance
✅ Technological Breakthroughs	Verified - KrF achieved mass production, ArF began accepting orders, and breakthroughs were made in CMP polishing pads
✅ Customer Expansion	Verified - Covers mainstream wafer fabs such as SMIC and Yangtze Memory Technologies
✅ Performance Growth	Verified - The revenue share of electronic materials increased from 0 to 27%, and photoresist revenue grew by over 50% year-on-year for consecutive years
✅ Capacity Implementation	Verified - Photoresist, resin, and CMP polishing pad projects are progressing as planned
✅ Capital Market Recognition	Verified - Strong stock price performance, with continuous optimism from institutions

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, which is mainly reflected in:

1. Strategic Correctness
   : Choosing photoresists as a breakthrough point, targeting the urgent demand for domestic substitution of semiconductor materials
2. Execution Effectiveness
   : Quickly acquiring technology and market position through acquisitions, then strengthening core competitiveness through independent R&D
3. Performance Verification
   : The photoresist business has achieved year-on-year growth of over 50% for two consecutive years, and the revenue share of electronic materials continues to increase
4. Platform-Based Potential
   : Expanding horizontally from a single photoresist business to CMP polishing pads, PI materials, etc., with the prototype of a platform-type company taking shape

Catalyst	Time Window	Impact Level
Implementation of MOFCOM’s New Regulation on Japan	2026	★★★★★
Full Production and Volume Expansion of CMP Polishing Pads	2026-2027	★★★★☆
Mass Supply of ArF Photoresists	2026	★★★★★
H-Listed IPO Financing	2026	★★★☆☆
Breakthrough in EUV Photoresists	After 2027	★★★★★

According to the forecast of Shanghai Securities, the company’s net profit attributable to shareholders from 2025 to 2027 will be RMB 560 million, RMB 683 million, and RMB 883 million respectively, corresponding to PE ratios of 36.82x, 27.39x, and 21.42x[1]. Considering the long-term logic of domestic substitution of semiconductor materials and the first-mover advantage of the company’s platform-based layout, the current valuation has medium- and long-term allocation value.

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[1] Shanghai Securities Research Report. Initial Coverage Report on Tongcheng New Materials: Dual Leader in Photoresists + Rubber Additives, Electronic Materials Business Rides the Wave of Domestic Substitution. March 2025.

[2] Langge Finance. Tongcheng New Materials, Forging Ahead in Photoresists! Sina Finance. October 14, 2025.

[3] Langge Finance. Domestic Photoresists, Who Will Have the Last Laugh? Sina Finance. December 20, 2025.

[4] Fortune Account. Triple Growth Logics of Domestic Photoresist Leader. Eastmoney. January 10, 2026.

[5] Fortune Account. Sprinting for “A+H” Listing, Tongcheng New Materials’ “Crown Jewel” Becomes a Key Chip. NetEase Finance. January 2026.

[6] Securities Times. Related Reports on Tongcheng New Materials’ Stock Trading Abnormal Fluctuation Announcement. January 2026.

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