A recent report from Zheshang Securities Co., Ltd. indicates that the thermal interface material (TIM) sector is experiencing a significant structural shift. As AI-driven power consumption surges, TIM is transitioning from a supporting component to a critical bottleneck, with premium supply becoming increasingly constrained. The material landscape is evolving from traditional silicone grease toward graphene and liquid metal solutions, while also creating new categories like TIM1.5 and TIM3, resulting in a tiered scarcity across the high-end market.
The genuine barriers to entry in premium TIM lie in achieving closed-loop manufacturing processes and navigating customer certification cycles that can stretch from one to three years. These hurdles create a scenario where effective supply remains scarce despite rising demand. HFC, leveraging its first-mover advantage in graphene technology, has secured certifications from leading clients and saw its carbon-based gasket revenue multiply sixfold in 2025, underscoring the strong earnings elasticity available behind high entry barriers.
Where the opportunities are emerging
The global TIM market has been growing steadily, with China's segment expanding at 11.09% and now representing more than half of worldwide demand. The AI compute upgrade is fundamentally reshaping TIM's value proposition. Traditional air-cooling auxiliary materials are migrating toward liquid cooling's core interface applications, and Nvidia's Rubin platform is shifting to fully adopt new graphene-based thermal interface materials, opening substantial growth potential for high-end TIM2 solutions. The emergence of lidless bare-die architectures and 3D stacking is also creating high-barrier, pure incremental demand for TIM products. When combined with the dense interface requirements from 1.6T optical modules and co-packaged optics architectures, these factors collectively support rapid market expansion.
How domestic players are positioning in the competitive landscape
The competitive structure in global TIM materials exhibits clear stratification. The premium segment remains dominated by established European, American, and Japanese corporations, whose decades of formulation expertise and comprehensive quality control capabilities secure major shares in high-value sectors like semiconductor-grade and automotive-grade applications. At the mid-to-low end, technical barriers are lower, attracting numerous domestic small and medium enterprises that compete intensely on price while achieving economies of scale.
Chinese manufacturers, despite starting later, are accelerating their research into premium products and have achieved incremental breakthroughs in thermal pastes, thermal pads, phase-change materials, and novel high-thermal-conductivity materials such as graphene and carbon nanotubes.
Recommendations and risk factors to monitor
Investment attention is directed toward Jones Tech PLC, Kenuo, Suzhou Tianmai Thermal Technology Co., Ltd., Allied Group, and Fenghua Advanced Technology. Key risks include potential shortfalls in AI computing power and high-speed optical module demand, delays in graphene TIM industrialization and customer adoption, competition from international players and alternative technology routes, raw material supply and price volatility, and risks associated with capacity expansion, customer concentration, and profitability fluctuations.