In the second quarter of 2026, the semiconductor packaging and testing industry will usher in a major change.
From 2023 to 2025, the global packaging and testing industry will continue to be under pressure. Consumer electronics and traditional storage inventories are high, mature processes have overexpansion, and overseas demand is weak. The utilization rate of packaging and testing plants has dropped to below 60%. Upstream packaging materials have also continued to cut prices and production capacity has been idle.
Today, the industry is facing a triple bottom reversal in the inventory cycle, computing power capital expenditure cycle, and advanced packaging technology iteration cycle.
First of all, inventory clearance is completed, and spot quotations continue to rise.
Inventories of consumer chips and memory chips have fallen back to safe levels for manufacturers. DRAM and NAND have started to increase prices since the first quarter, and downstream mobile phone and PC customers have returned replenishment orders.
The utilization rate of domestic leading packaging and testing plants has rebounded to 88% – 95%, idle production lines have been fully restarted, and the purchase volume of basic packaging consumables has increased by more than 35% month-on-month. The industry has switched from “destocking and contracting purchases” to “active stocking and expansion of purchases.”
Secondly, AI advanced packaging orders fill up the annual production capacity.
TSMC CoWoS, Samsung HBM packaging, and domestic JCET/Tongfu/Huatian 2.5D/3D packaging production line orders are scheduled to the first half of 2027. Cloud manufacturers and AI chip design companies continue to add computing power packaging orders. The proportion of traditional low-end packaging and testing continues to decline. The revenue of high-value-added advanced packaging exceeds 42%, driving up the gross profit margin of the overall packaging and testing industry.
Furthermore, the regulations in the United States, Japan and the Netherlands have forced domestic packaging and testing to be independent in the entire chain.
The delivery cycle of overseas advanced equipment, substrates, and tube cases has lengthened. Domestic wafer factories and chip companies have prioritized switching to local packaging and testing supply chains, which has forced the acceleration of domestic verification of packaging supporting materials. Ceramic substrates, ceramic tube cases, and high-capacity MLCCs have ushered in a centralized import window.
Electronic ceramics segment covers the three core packaging categories, ushering in both volume and price increases.
First, AI high-power consumption chips break the physical upper limit of traditional organic materials, and ceramic substrates achieve structural replacement.
NVIDIA’s new generation Rubin and Ultra architecture single GPU power consumption exceeds 2800W, and future iteration models are approaching 3000W. Traditional organic substrates cannot bear the heat dissipation requirements, while aluminum nitride ceramics have high thermal conductivity and thermal expansion coefficients that are highly matched to silicon wafers.
Currently, head manufacturers adopt hybrid packaging solutions, and the value of a single carrier board increases by 30% – 35%. In 2026, the demand for aluminum nitride substrates for AI servers will increase by more than 90% year-on-year.
High-speed optical modules are also increasing simultaneously. Overseas Kyocera’s production capacity is saturated, and orders from domestic manufacturers are overflowing.
Second, the advanced packaging architecture has been upgraded, and the application scenarios of ceramic materials have been comprehensively expanded.
Previously, ceramics were only used for military industry and radio frequency device packaging. Nowadays, 2.5D/3D stacking, SiP system-level packaging, and CPO optoelectronic co-packaging are all inseparable from ceramic substrates. The downstream demand is no longer single, and the anti-cyclical properties of industry demand have been greatly enhanced.
Third, the overseas supply gap continues to expand, and domestic ceramics have entered a price increase + replacement double dividend cycle.
For a long time, high-end aluminum nitride powder and metallized ceramic substrates have been monopolized by Japan’s Kyocera and Tokuyama. However, Japan’s production capacity expansion has been slow, and domestic export control of medium and heavy rare earths has also restricted the expansion of overseas companies.
Domestic leading companies have achieved breakthroughs in the entire industry chain, with low product prices and short delivery cycles. Two rounds of price increases have been implemented in 2026. Leading companies have expanded their production capacity and are still at full production, with gross profit margins increasing significantly.
Fourth is top-level support from industrial policies, with ceramic materials included in the independent and controllable core list of semiconductors.
The “15th Five-Year Plan” key new material catalog encourages the development of related categories, and many places provide financial support. Domestic leaders set assessment indicators to accelerate the implementation of substitution.
The segmented track market has vast space.
Ceramic substrates are expected to exceed US$9.41 billion in 2026, and the AI computing power-related aluminum nitride substrate segment growth rate exceeds 60%; the demand for computing power MLCC is growing at a high rate; the domestic market size of ceramic packaging tubes exceeds 4 billion yuan, and the domestic substitution space exceeds 10 billion yuan.
From 2026 to 2028, the compound growth rate of the electronic ceramic packaging materials industry will remain above 25%, which is much higher than the overall growth rate of the packaging and testing industry.
There are three major supports for the sustainable market, including rigid and irreversible demand, barriers to supply expansion, and a clear rhythm of performance realization.
However, there are also some objective risks, such as global cloud manufacturers reducing computing power capital expenditures, Japanese manufacturers accelerating overseas production capacity deployment, and high-end ceramic technology research and development falling short of expectations.
In short, the inflection point of this round of semiconductor packaging has restructured the downstream material demand structure. Electronic ceramics, with their irreplaceable material properties and multiple benefits, have ushered in a mid- to long-term main boom market with both volume and price rising. It is the segment with the strongest certainty and the most elastic performance in the packaging industry chain.
