The Zhitong Finance App learned that CITIC Construction Investment Securities released a research report saying that in '24, China's aviation development industry's demand for ceramic-based composites may have reached an inflection point. With related companies' technological breakthroughs, reduced production costs, and increased application maturity, there is great potential for CMC growth in China's aviation development sector. There is a large demand for upstream raw materials in the SiCF/SiC application verification stage, and the upstream process is expected to take the lead after entering the small-batch delivery and batch production stage. Recommended attention: Torch Electronics (603678.SH), Chujiang New Materials (002171.SZ). With the optimization of CMC preparation technology, the reduction of upstream fiber costs, and the improvement of application maturity, midstream CMC parts manufacturers are expected to usher in a period of rapid development. Recommended attention: Huaqin Technology (688281.SH), China Aviation Hi-Tech (600802.SH).

The main views of CITIC Construction Investment Securities are as follows:

Ceramic-based composites have excellent properties at high temperatures. SiCf/SiC is a hot topic of research in recent years

A ceramic-based composite (CMC) refers to a composite material introduced into a ceramic substrate to form a composite material with the introduced reinforcing material as a dispersed phase and a ceramic substrate as a continuous phase. It is mainly composed of a ceramic substrate, fibers, and an interface layer. Compared with resin-based composites and metals, CMC has excellent properties such as high temperature resistance, low density, high specific strength, high specific mold, oxidation resistance, and ablation resistance.

According to the different ceramic substrates, CMC is generally divided into two categories: oxide base and non-oxide base. Non-oxide groups are more resistant to high temperatures. Non-oxide-based CMC mainly includes CF/SiC (carbon ceramic) and SiCf/SiC. The latter has stronger oxidation resistance and longer lifespan, and is a hot topic of research in recent years.

CMC has great application prospects in aerospace and nuclear energy fields, and has a broad market space

In the field of aero engines, SiCf/SiC can achieve high temperature resistance, oxidation resistance, weight reduction, and long life. It is an ideal material for the hot end of aero engines. It has been applied in batches to hot-end stationary parts, and applications for rotating parts are being explored.

In the field of nuclear energy, SiCf/SiC composites have excellent properties such as high melting point, high thermal conductivity, high temperature stability, small neutron absorption cross section, and excellent neutron irradiation stability, making them ideal candidate materials for the first wall of reactor cladding, flow channel inserts, control rods, and shunts.

CF/SiC's oxidation resistance is weaker than SiCf/SiC, but its high temperature resistance is superior to SiCf/SiC. It can effectively solve the heat protection and weight reduction requirements of hypersonic vehicles. It can also be used in rocket engines and satellite mirrors, and has achieved mature applications in the aerospace field.

CF/SiC has good friction and oxidation resistance, and its frictional properties are not sensitive to external environmental media. It is expected to be a good substitute for traditional powder metallurgy and C/C composite brake materials. Carbon ceramic brake discs have been used in batches in automobiles and airplanes, and have also been used in high-speed rail.

Missile antennae need to have multiple functions such as carrying, temperature resistance, transmission, and corrosion resistance. Ceramic-based transmission composites are the development trend of antenna mask transmission materials. Continuous Si3N4 fiber is expected to replace quartz fiber to prepare a new generation of high Mach number missile antennae.

The global CMC market is growing rapidly. The global CMC market size is US$11.9 billion in 2022. The CMC market is expected to grow at a CAGR of 10.5% and reach US$21.6 billion in 2028, with the CMC-SiC market accounting for the highest share. Currently, the CMC market for defense and aerospace accounts for the highest share, followed by automobiles, and demand from the energy sector will continue to grow.

CMC process barriers are high, and GE's CMC preparation has entered the industrialization stage

The preparation process of CMC components is complicated, and the barriers are extremely high. Overall, the preparation process of ceramic-based composites is divided into several steps: fiber preparation, prefabricated weaving, fiber interface layer preparation, substrate preparation and densification, and machining and molding. For CMC components with poor working environments, such as aero engine hot end parts, it is also necessary to prepare environmental barrier coatings.

The cost of SiC fiber accounts for more than 50% of the cost of finished CMC products, and is mainly prepared using the precursor conversion method. CVI, MI, and PIP processes are more mature in the preparation process for CMC composites, but they have their own limitations. CVI can prepare large, thin-walled, and complex structural parts, but the cost is high, the process is complicated, the deposition rate is long, and the preparation cycle is long, and it is not suitable for preparing thick-walled parts; the MI process has the advantages of simple and efficient, close to net molding, short preparation cycle, and low porosity of the CMC substrate, but there are residual free silicon elements that affect the strength of the material and reduce the temperature resistance of the material; PIP is widely regarded as an effective method for manufacturing large, complex structural components, but it consumes a lot of pioneers and has a long process cycle. The composite process can combine the advantages of various processes.

GE began technical research on preparing SiC/SiC composites using the MI process in the late 1980s. It has gone through the process exploration stage and large-scale verification stage, and has now entered the industrialization stage (2016 to now). GE has established the first vertically integrated CMC supply chain in the US, including the production of SiC fiber, pre-impregnation, and CMC components. It can produce 20 tons of CMC pre-impregnation, 10 tons of SiC fiber, and more than 50,000 CMC engine components every year. GE's 2019 report said that GE and CFM engines' demand for CMC has increased 20 times in the past 10 years, and CMC component production is expected to increase tenfold over the next 10 years.

China has built a relatively complete CMC industry chain, and CMC aviation may reach an inflection point

Overall, China's ceramic-based composites are almost in a parallel position with foreign countries. China is leading the way in the field of brakes and aircraft heat protection, but it is still lagging behind in the field of aero engines. In terms of silicon carbide fibers, early SiC fibers were a bottleneck in China's CMC industry. Currently, China's second-generation silicon carbide fibers have issued national standards, indicating that related industries have matured. Third-generation SiC fibers have achieved technological breakthroughs. The products developed in the laboratory are close to the level of products of the same type in Japan, but the production level has not yet reached the scale of industrial production. In terms of silicon nitride fibers, continuous domestic Si3N4 fibers have been mass-produced, and our country is basically running side by side with the US, Japan, Germany, and France. In terms of preparing ceramic-based composites, China's CVI process has achieved industrial production. The PIP process is relatively mature, and the MI process also has related units and enterprises

From an application perspective, in terms of CF/SiC, China has applied it to aircraft and high-resolution space remote sensing satellites as thermal structures and space camera support structures, etc., and is in an international leading position in the application of aircraft braking materials; in terms of SiCF/SiC, domestic aviation CMC has entered the application verification stage and has not yet achieved large-scale engineering applications, but in 2024, China's aviation development industry's demand for ceramic-based composites may have reached an inflection point.

China's CMC industry chain is relatively complete. In terms of CF/SiC, there are many companies participating in carbon fiber and carbon ceramic brake materials, but in terms of SiCF/SiC, compared with foreign countries, the number of enterprises in China is small, the unit size is small, and the industrial chain is weak. There are generally problems of limited production capacity, poor product batch stability, and high production costs. The silicon nitride direction is still in the early stages of application, and a few companies already have a layout.

Risk analysis: CMC downstream application progress falls short of expected risk; upstream fiber industrialization progress falls short of expected risk; 3. Market competition increases risk.