In recent times, the spotlight has increasingly shone on technological innovations, particularly surrounding optical modules and various concepts rooted in technological creativityOne player in this invigorating landscape that has caught the attention of market investors is Tian Tong Co., Ltd(600330.SH), a pioneer in the field of new materialsAnalysts emphasize that in response to the rapid advancements of technology and the pressing need for energy transformation, Tian Tong is positioned to capitalize on its forward-thinking strategic layouts, robust technological foundations, and comprehensive industrial chains, thereby unlocking substantial value in burgeoning sectors such as artificial intelligence (AI) and renewable energy.

Founded in 1984 by Pan Guangtong, Tian Tong’s journey began with the establishment of Haining Electronic Component Plant, which laid the groundwork for what the company is today

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This was a time when China’s home appliance industry was witnessing explosive growthWith sharp market insights, Pan seized the opportunity brought on by the massive influx of television assembly lines and a nationwide push toward domestic appliance manufacturingBy focusing initially on ferrite soft magnetic materials, the company navigated through a landscape marked by rudimentary manufacturing setups and equipment often cobbled together from industry peers’ designsNevertheless, through determination and a profound understanding of market needs, Tian Tong gradually solidified its position in the soft magnetic materials sector, earning the nickname "King of Soft Magnetics" in the 1990s and establishing itself with a treasure trove of technical expertise and rich market experience.

In 2001, the company's fortunes were further enhanced when it successfully went public, heralding a new era for development

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Recognizing the limitations posed by a relatively constrained market size for its primary materials business, the company’s leadership took decisive action to implement a diversification strategyWith a keen understanding of the pivotal role autonomous specialized equipment plays in enhancing product quality, Tian Tong boldly ventured into the upstream smart equipment sector, tackling the challenges of independently developing core manufacturing equipmentThis comprehensive approach led to the construction of a full industrial chain—from materials to equipment—greatly enhancing the company’s competitive edge.

On the horizontal front, leveraging its accumulated thermal technology expertise in soft magnetic materials, Tian Tong gradually expanded into the crystal materials arenaBy 2010, the company had made strides into the sapphire crystal materials market, achieving mass production capabilities for 400 kg crystals and boasting the ability to process wafers exceeding 6 inches

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Its production line has achieved superior yields and output levels that place it at the forefront of the industryIn 2016, capitalizing on its experience in sapphire materials, the company ventured into piezoelectric crystal materials, overcoming significant technological barriers related to large-size crystal growth, breaking foreign monopolies, and swiftly claiming a leading position within China.

Tian Tong's line of magnetic materials encompasses a diverse array of products, including manganese-zinc ferrites and nickel-zinc ferrites, alongside metal soft magnetic materialsThese products find applications across a wide spectrum of industries—spanning new energy vehicles (NEVs), photovoltaic energy generation, energy storage, 5G communications, data centers, and consumer electronicsDespite numerous global economic challenges, the market for soft magnetic materials continues to thrive, driven by strong demand in the green energy sector, electric vehicles, and data centers.

The company has maintained a leadership position within this space, particularly notable in the burgeoning applications linked to new energy vehicles and data centers, where Tian Tong's sales volume has seen steady growth

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The surge in the data center sector has also contributed to the company's robust growth trajectoryAdditionally, Tian Tong is spearheading the establishment of a provincial-level engineering research center in Zhejiang focused on new magnetic and optoelectronic information materials, dedicated to overcoming technological challenges and promoting innovation capabilities within the industryOn April 1, 2024, national standards developed by the company regarding the standard inductance factors of ferrite magnetic cores with air gaps will officially come into effect, further enhancing both the company's and the industry's product quality and technological standards, ultimately standardizing production and commercial practices.

Another cornerstone of Tian Tong's business model lies within its sapphire crystal materials segment, which has flourished since its inception in 2010. The company has harnessed advanced Japanese technologies while significantly ramping up its in-house R&D investment, leading to a series of critical technological breakthroughs

Currently, the company has successfully mastered C-axis growth techniques, facilitating large-scale production of 400 kg crystalsThey continue to make headway in large-size sapphire processing capabilities, with production yields and line output that lead the industryBy 2024, the company plans to unveil a 1000 kg crystal at the Shanghai SEMICON semiconductor exhibition, addressing a gap in the market for large optical window applications.

Industry analysts recognize sapphire materials as essential foundational components for industrial applicationsThey are characterized by their high strength, exceptional hardness, and outstanding corrosion resistance, making them invaluable in fields like LED substrates, protective windows for consumer electronics, medical aesthetics, industrial lasers, and security systemsWith the growing prevalence of NEVs and emerging display technologies, demand for sapphire materials is expected to expand further across automotive lighting and displays, onboard cameras, novel VR headsets, and commercial displays.

Meanwhile, in the domain of piezoelectric crystal materials, Tian Tong has leveraged its unique advantages in lithium niobate thermal field design

Their lithium niobate growth process is comprehensive, covering applications in both acoustic and optical devices, with capabilities for both single-side and double-side polishing techniquesMost notably, the company has achieved successful independent R&D and mass production of 6-inch lithium tantalate (LT), lithium niobate (LN) crystals, and black polished wafer productsFurthermore, it has developed 8-inch piezoelectric crystal materials, marking a significant stride toward localized alternatives to foreign productsCollaborating with teams from Tsinghua University and the Chinese Academy of Sciences, Tian Tong is well-positioned to leverage synergies in product development, channel resources, and terminal support, solidifying its growth trajectory in the piezoelectric crystal materials marketAlthough the bulk market for large-size lithium niobate wafers is currently dominated by foreign suppliers, domestic firms like Tian Tong have made impressive strides, narrowing the gap with leading foreign competitors and showcasing promising prospects for localization.

With the explosion of demand in the AI sector, a surge in the need for high-speed optical communication modules is observable, positioning lithium niobate crystal materials as key components within optical communications

The market potential in this segment is poised for significant growthAs noted on March 13, 2024, on the company's investor interaction platform, devices based on thin-film lithium niobate materials show promise in applications for 1.6T optical modules, with the lithium niobate single crystal material serving as a critical upstream raw material for these thin-film modulator devices.

According to forecasts from LightCounting, the market size for coherent digital signal processors (DSPs) exceeding 100G is projected to escalate sharply from 2021 through 2027. Furthermore, thin-film lithium niobate modulators designed for use with 600G and higher coherent optical modules are expected to witness substantial growth potential, reinforcing Tian Tong’s significant role in this evolving market.

At the heart of Tian Tong’s impressive “materials + equipment” dual-drive model is thermal technology, serving as the essential connector that bridges various business units within the company

This facilitates resource sharing and technological synergiesOn the materials front, the focus is centered on magnetic materials, sapphire crystals, and piezoelectric crystals, while the equipment segment is dedicated to the R&D and manufacturing of specialized equipment for crystalline and powder materials—two fronts that robustly support each otherThermal technology stands as a core component that guarantees the performance of material production and equipment.

Taking the example of magnetic material production, the role of thermal technology becomes crucial, with Tian Tong leveraging its profound insights in this area to craft high-performance thermal sintering equipmentThis apparatus is lauded for its precise temperature control, excellent gas tightness, and energy efficiency, ensuring an elevation in material quality during the sintering process while meeting the stringent demands of high-end markets, laying a robust foundation for applications in sectors like new energy and electronics

Moreover, this advancement simultaneously reinforces the equipment segment by validating technology and enhancing market reputation.

In the realm of crystalline materials, the growth process in crystal furnaces is heavily reliant on thermal technologyThrough precise thermal structure design and temperature distribution control, a stable temperature gradient environment is created, effectively governing both the speed and direction of crystal growth, significantly reducing internal defects while enhancing qualityProminently, in breakthroughs concerning C-axis crystal growth technologies, meticulous management of temperature gradients and heat transfer via thermal technologies has proven pivotal, propelling the crystal materials segment toward higher standards and opening up expansive market opportunities for the materials business, and subsequently generating new demands for equipment upgrades, thereby establishing a virtuous cycle.

Committed to innovation through research and development, Tian Tong Co., Ltd