A report from Gf Securities Co.,Ltd. suggests solder paste, often called the "lifeblood" of electronic connections, is experiencing a powerful triple convergence of volume, price, and profit margins driven by AI.

Within the technological shifts in optical modules and advanced packaging, high-end solder paste is seeing a tenfold leap in value and an acceleration in domestic substitution, positioning it as another high-potential sector following drill bits in the AI hardware wave. Domestic companies have launched T7-grade solder paste and achieved application by 2025, indicating the industry has entered a phase of rapid scaling from 1 to 100. The report recommends focusing on upstream and downstream companies with production capabilities for high-end solder paste and tin powder.

Core Investment Thesis

Solder paste acts as the critical bonding agent for electronic components, and the AI wave is creating new demand expansion for high-end variants.

The AI-driven surge is fostering an industry trend towards higher processing precision and integration in optical modules, advanced packaging, and PCBs. Combined with rising overall demand, these factors will drive a sharp increase in market demand for high-end solder paste with finer particle sizes.

1. High-Speed Optical Module Sector: The report estimates the market size for high-end solder paste in this area will be just 600 million yuan in 2025 but is projected to grow rapidly to 3.176 billion yuan and 4.428 billion yuan in 2027 and 2028, respectively.

(1) Volume Dimension: Continuously escalating AI data transmission needs are boosting optical module shipment volumes.

(2) Technology Upgrade Dimension: As optical modules advance from 400G to 1.6T and towards future NPO/CPO technologies, the number of solder joints and integration density inside them keeps increasing. This simultaneously pushes up both the volume and grade of solder paste required, thereby raising the solder paste value per module.

According to a company announcement from Victory Giant Technology (HuiZhou) Co.,Ltd. dated June 8, 2026, the solder paste value per optical module has risen from 0.3-0.75 yuan for 100G modules to 5-72 yuan for 1.6T modules.

2. AI PCB Sector: AI PCBs are adopting mSAP processes to further reduce line width/spacing. Coupled with simultaneous demand growth, AI PCBs are expected to become a second major driver for high-end solder paste demand.

3. Advanced Packaging Sector: Semiconductors represent a key application area for solder paste. Against the backdrop of ongoing industry development, advanced packaging offers clear medium-to-long-term growth certainty, making it a significant downstream driver for high-end solder paste demand.

Market Structure and Substitution Opportunity

The high-end solder paste market exhibits a "foreign leaders, domestic chasers" competitive landscape, with significant potential for import substitution.

Solder paste, a core consumable for electronic component interconnection, is primarily composed of tin powder and flux. It is typically graded by particle size, with mid-to-low-end paste mainly used for SMT processes and high-end paste primarily for semiconductor advanced packaging.

The current high-end solder paste market features a competitive structure where foreign firms hold the leading position and major market share, while domestic companies are in pursuit. Domestic players launched T7-grade solder paste and achieved application by 2025, marking the industry's entry into the rapid scaling phase from 1 to 100.

Value and Profitability Expansion

High-end solder paste offers substantially higher unit value and gross margins compared to mid-to-low-end products.

In terms of unit value, T5 solder paste is priced around 1 yuan/gram, while T6 and T7 are priced at approximately 6 yuan/gram and 22.5 yuan/gram, respectively, representing a 6 to 20-fold increase in value per gram over T5.

Regarding gross margins, mid-to-low-end solder paste margins range from 10-40%, whereas high-end solder paste margins exceed 70%.

The combined effect of higher unit value and superior margins enables a dramatic expansion in profit per gram for high-end solder paste.

The report notes that several domestic companies are taking crucial steps towards import substitution.

Key Companies to Monitor

Focus on upstream and downstream enterprises with production capabilities for high-end solder paste and tin powder.

(1) Victory Giant Technology (HuiZhou) Co.,Ltd.: A representative domestic solder paste company with leading advantages in the high-end segment. According to its annual report and a June 8, 2026 announcement, the company has successfully launched T7-grade high-end solder paste and achieved application in high-speed optical modules.

(2) Gripm Advanced Materials Co.,Ltd.: The company focuses on the upstream tin powder segment and holds a leading position in high-end tin powder. Its website indicates it currently offers T7 tin powder products. According to its investor relations activity record from June 2026, the company holds approximately a 15% domestic market share in tin-based solder powder materials, ranking first.

(3) Zhejiang Huaguang New Material Co.,Ltd.: Based on its website and Wind data, the company has business operations in the solder paste segment, though revenue contribution is relatively small. It already possesses production capabilities for T6 solder paste.

Risk Factors

Risks include macroeconomic changes and fluctuations in downstream industries; potential delays in product technology development; and volatility in raw material prices.