Castech Inc. Sees Momentum Amid Surge in the Advanced Photolithography Sector

Castech Inc. (ticker: 002222), headquartered in Fuzhou, specializes in the production of laser crystals and related optical components. The company has honed three distinct crystal‑growth techniques—flux, Czochralski, and water‑solution methods—to manufacture precision glued crystal products. As the global semiconductor industry accelerates its transition to advanced process nodes, Castech’s expertise in high‑purity optical materials positions it to benefit from the expanding demand for photolithography equipment and associated consumables.

Market Context: A Resurgence in Advanced Process Demand

On September 17, 2025, the Shanghai Stock Exchange witnessed a robust rally in the semiconductor sector, with the photolithography (光刻机) segment emerging as the key driver. Multiple shares reached daily highs, including Castech’s peer, 福晶科技 (Fujing Technology), which hit a limit‑up on its first trading day of the session. The surge was fueled by:

  • Projected Growth of Advanced‑Process Capacity: The International Semiconductor Industry Association estimates that from the end of 2024 to 2028, capacity for 7 nm and below nodes will rise from 850,000 wafers/month to 1.4 million wafers/month—an increase of roughly 69 % and a compound annual growth rate of about 14 %. This expansion is expected to drive a doubling of demand for photolithography tools and their optical components.
  • Capital Expenditure Outlook: By 2028, capital spending on advanced process equipment is projected to exceed US$50 billion, up from US$26 billion in 2024. Such expenditure will directly benefit suppliers of high‑performance optics and laser crystals.
  • AI‑Driven Production Gains: The rapid adoption of artificial intelligence across manufacturing processes has amplified the need for precise, low‑loss optical systems, further bolstering the market for high‑quality laser crystals.

Castech’s Position Within the Value Chain

Castech’s product portfolio aligns closely with the core requirements of advanced photolithography systems:

  • Precision Laser Crystals: The company’s crystals are integral to the generation of deep‑ultraviolet (DUV) laser light, a critical component in 7 nm and below lithography nodes.
  • Optical Component Integration: By offering glued crystal assemblies, Castech simplifies the integration of laser modules into larger photonic systems, reducing assembly complexity and improving reliability.
  • Manufacturing Versatility: The trio of crystal‑growth methods—flux, Czochralski, and water‑solution—provides Castech with a flexible production pipeline capable of meeting varied customer specifications and scaling rapidly in response to market demand.

Recent Performance Highlights

  • Strong Q1 2025 Results: Castech reported a 18.1 % year‑over‑year increase in revenue, reaching ¥51,906.34 million, while net profit attributable to shareholders rose by 16.96 % to ¥12,814.82 million. These figures signal robust demand for the company’s crystal products.
  • Strategic Customer Relationships: In May 2025, Castech secured contracts to supply precision optical components and gratings to Huawei‑related enterprises, underscoring its penetration into high‑profile, high‑value segments of the optics market.
  • Expansion into Ultrafast Laser Markets: The company announced plans to broaden its footprint in the pico‑ and femtosecond laser market, targeting key applications involving LBO, Nd:YVO₄ crystals, and acousto‑optic devices.

Market Dynamics and Investor Sentiment

During the session on September 17, Castech’s peers within the photolithography and optics sub‑industry experienced significant price appreciation:

  • Market‑Wide Rally: The Shanghai Composite index closed 0.37 % higher, the Shenzhen Component index rose 1.16 %, and the ChiNext index gained 1.95 %. This collective lift reflected investor optimism about the semiconductor supply chain.
  • Capital Flow into Castech’s Sector: A notable infusion of financing was recorded for Castech’s peer, with 5.06 million yuan of buying pressure on September 16, representing 20.97 % of the day’s net inflows. Such activity hints at growing institutional interest in optical component suppliers.
  • Sectoral Momentum: The photolithography index surged over 5 %, with key constituents including wave‑length photonics, optical component manufacturers, and lens suppliers recording limit‑up gains. Castech’s strategic focus on laser crystals positions it favorably within this upward trajectory.

Forward Outlook

  • Continued Demand for Advanced Photonics: As semiconductor fabs invest in 7 nm and sub‑7 nm nodes, the need for high‑quality laser crystals will persist, providing a stable revenue base for Castech.
  • Potential for Strategic Partnerships: Castech’s established relationships with major telecommunications and AI companies suggest further opportunities for collaboration, especially as AI workloads intensify.
  • Risk Considerations: While the market outlook is positive, Castech must manage raw material price volatility and maintain its production capacity to meet potential spikes in demand.

In summary, Castech Inc. stands at a strategic crossroads where its specialized laser crystal expertise dovetails with a revitalized semiconductor supply chain. The recent market rally in photolithography and optical components, coupled with robust quarterly performance, underscores the company’s capacity to capitalize on the ongoing shift toward advanced semiconductor manufacturing.