Report Date: 2026-08-31 ｜ Sector: Soft Magnetic Materials (Power Electronics) ｜ Stance: Cautiously Bullish (conviction 0.5) ｜ Horizon: 12-18 months
This is the first report filed for this sector; there is no prior view to reconcile.
This report covers soft magnetic materials for power electronics, divided into three segments by material system:
Excluded: traditional silicon steel (for motors/power-frequency transformers) and permanent magnet materials (NdFeB etc., which fall under a separate research scope). One-sentence industry chain map: bulk raw materials such as iron oxide red/ferrosilicon/pure iron → magnetic materials (ferrite sintering / gas atomization + forming / amorphous continuous casting ribbon) → cores/magnetic components (inductors, transformers) → downstream power supply and OEM manufacturers.
Global end-market structure of soft magnetic materials for power electronics (excluding silicon steel; estimated basis, weighted from downstream institutional data):
| End Market | Share (estimated) | 2024-2027 Growth | Logic |
|---|---|---|---|
| Consumer electronics/appliances/lighting | ~40% | ~+2%/yr | Switching power supplies and EI cores; high volume, low price; base with no growth |
| NEVs + charging piles | ~15% | +15~20%/yr | 2026E global NEV sales 28.496 million units (+21%, EVTank); magnetic components per BEV ~RMB 1,300 vs ~RMB 250 for ICE vehicles |
| Industrial/power/UPS/others | ~27% | ~+4%/yr | Inverters, power quality, UPS; tracks industrial capex |
| PV/energy storage inverters | ~10% | -9% in 2026E, then recovery | Wood Mackenzie: 2025 global inverter demand 577GW (-2%), 2026E 523GW (-9%); China's installation rush front-loaded demand |
| AI data center/server power | ~8% | +30~35%/yr | 2026E AI server shipments +28.3%~31% (TrendForce); volume and price per unit both rising |
(Sources: EVTank "China New Energy Vehicle Industry Development White Paper (2026)", http://www.evtank.cn/DownloadDetail.aspx?ID=666 ; TrendForce via Sina Finance, https://finance.sina.com.cn/stock/t/2026-01-20/doc-inhhxznr7104335.shtml ; Wood Mackenzie via Solarbe; China ferrite downstream structure from chinabaogao.com, https://m.chinabaogao.com/detail/726804.html . Shares are estimation assumptions, not first-hand statistics.)
AI represents a dual repricing of volume and price for soft magnetics, with all three links of the chain in place:
Inflection characterization: the AI demand inflection has been quantified (all three links—driver trajectory × per-unit usage × penetration ramp—in place), but "absolute dollar value of magnetics per unit" lacks first-tier institutional data, and the timing of native 800V architecture is contested—hence the headline conclusion uses "structural upgrade" rather than "800V inflection has arrived."
Base year 2025 at ~RMB 164.5 billion (=USD 23.0 billion × 7.15, Grand View Research basis, aggregator data, to be verified; IMARC gives USD 36.5 billion on the same basis—wide dispersion across institutions, likely due to inconsistent inclusion of silicon steel/components). Bottom-up bridge:
Net increment ~+RMB 43.7 billion, 2028E ~RMB 208.2 billion, implying a 3-year CAGR of 8.2%. Cross-check: extrapolating Grand View's own 4.8% long-term CAGR gives ~RMB 189.3 billion for 2028, about 10% below the bridge value—the deviation is acceptable (GVR's long-term blended CAGR underweights AI/EV structural weight), but the base year itself comes from an aggregator, so the headline size figure is flagged "to be verified" overall; the bridge's value lies in the increment structure, not the absolute level. Sensitivity: AI weight is the biggest variable—only an 8% share contributes 44% of the net increment; if the AI slope is revised down 30%, the net increment falls to ~RMB 38.0 billion.
Structural (contributing the vast majority of increment): AI data centers (volume and price both rising) + NEVs (penetration × per-vehicle value both rising) + structural substitution of nanocrystalline/powder cores for ferrites in the mid-frequency power band. Cyclical: consumer electronics/appliances (~40% weight, +2%/yr, fluctuating with inventory and trade-in programs); PV/energy storage (~10% weight) is in a post-rush downturn in 2025-2026 (2026 domestic installations expected to fall to ~200GW, ~-37% YoY; global inverter demand -9%)—a cyclical headwind rather than structural weakening, but as the largest traditional downstream for powder cores, the short-term drag is real.
| Segment | Capacity (2025-2026) | Landscape | Utilization |
|---|---|---|---|
| Soft ferrites | China sales 510kt (2024, +6.25%); fragmented capacity, 200+ producers | Hengdian DMEGC ~50kt, global first tier; TDK/FDK lead in high-end generations but shrinking tonnage | Low-end underutilized; leaders at full capacity (Zhonggang Tianyuan self-reported "full utilization" in 2025H2) |
| Metal powder cores | Global ~217kt, China 90%+ | Poco Materials global revenue share 27.1%, No.1 (2024 output 38kt) | AI/automotive-grade lines near full capacity; second/third tier lower (Xinkangda self-reported low utilization) |
| Amorphous/nanocrystalline ribbon | Amorphous: Yunlu 105kt + Antai 60kt; nanocrystalline: Antai 15kt (global No.1 output) | Yunlu amorphous global share ~41%, No.1; nanocrystalline Proterial/Yunlu/Antai CR3 ~65% | Standard amorphous loose; nanocrystalline ultra-thin ribbon tight |
(Sources: Zhiyan Consulting, https://www.chyxx.com/industry/1228651.html ; Securities Times report on Poco Materials' HKEX prospectus, https://www.stcn.com/article/detail/4007498.html ; Yunlu Co. 2025 annual report summary, http://static.cninfo.com.cn/finalpage/2026-03-31/1225058683.PDF ; Antai Technology investor relations activity record 2026-06-10, http://static.cninfo.com.cn/finalpage/2026-06-10/1225362712.PDF )
Supply elasticity is moderate (ferrite kilns 12-18 months, powder core lines 1-2 years, ribbon casting lines 1-1.5 years), but high-end effective capacity is doubly constrained by yield and qualification: automotive-grade (IATF16949/AEC-Q) and AI power customer qualification cycles run 6-18 months; nominal capacity ≠ effective capacity. No major industry-wide shutdowns/force majeure found in the past 6 months; on the raw material side, industrial-grade iron oxide red at RMB 5,600-6,100/t (2026-08, 100ppi, https://www.100ppi.com/mprice/plist-1-1722-1.html ) is in stable supply—no cost-side shock.
| Generation | Representative Materials | Key Parameters | Status |
|---|---|---|---|
| Power ferrite · previous generation | PC40/DMR40 | Pcv ~420kW/m³@100kHz/200mT/100°C | Mature and oversupplied; fully mastered by Chinese producers |
| Power ferrite · current generation | PC95/DMR95/DMR96A, FDK 4H47 | Pcv ~300kW/m³ (~30% lower than PC40); TDK PC200 targeting 1-2MHz | Domestic DMR95/96A replacing imports at scale; mainstream for PV/automotive/server power |
| Metal powder core · high-current low-loss generation | FeSi GPV/NPA, chip inductor composites | Bs 1.0-1.5T, soft saturation, 5kHz-10MHz | AI chip inductors (Cu-Fe co-sintered) are the fastest-growing point in 2025-2026 |
| Amorphous/nanocrystalline generation | 1K101/1K107 ultra-thin ribbon | Nanocrystalline Bs ~1.2T, 12-18µm; core volume for same spec reducible by more than half; 20kHz-100MHz | Demand for AI power EMI, 800V, PV common-mode cores stepping up |
(Sources: TDK material handbook, https://product.tdk.com/en/system/files/dam/doc/product/ferrite/ferrite/ferrite-core/catalog/ferrite_material_characteristics_en.pdf ; Poco Materials announcements, https://money.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?stockid=300811&id=12154102 )
Physical boundaries of substitution: nanocrystalline dominates in the 10-20kHz mid-frequency band, while the 20-100kHz high-frequency band still relies on ferrites (especially TDK/Ferroxcube high-frequency grades)—substitution is "structural share-taking in the mid-frequency band + coexistence in the high-frequency band," not a wholesale generational replacement; ferrites remain hard to displace in cost-sensitive scenarios below 1MHz.
| Segment | Year | Supply (nominal) | Demand | Gap | Utilization |
|---|---|---|---|---|---|
| Soft ferrites (China) | 2025E | 59 | 52.5 | +6.5 | 89.0% |
| 2026E | 61 | 54 | +7 | 88.5% | |
| 2027E | 64 | 56 | +8 | 87.5% | |
| Metal powder cores (global) | 2025E | 21.7 | 20.5 | +1.2 | 94.5% |
| 2026E | 24 | 21.5 | +2.5 | 89.6% | |
| 2027E | 26 | 23.5 | +2.5 | 90.4% | |
| Amorphous/nanocrystalline (global) | 2025E | 16.5 | 13 | +3.5 | 78.8% |
| 2026E | 17.5 | 13.8 | +3.7 | 78.9% | |
| 2027E | 18.5 | 15 | +3.5 | 81.1% |
(Ferrite capacity and 2025 powder core capacity anchored to verified values + estimation; demand growth anchored to I2 end-market growth. Each cell's supply − demand = gap has been recomputed.)
Tightness ranking (tight → loose): AI/automotive-grade powder cores and nanocrystalline ultra-thin ribbon > mid-to-high-end MnZn ferrites > PV-grade powder cores > standard amorphous ribbon ≈ low-end ferrites (loosest). The evolution of powder core nominal utilization from 94.5%→90% depends on the race between 2027 capacity additions coming online and the pace of AI demand; amorphous ribbon is the loosest segment (surplus 35kt+), but 12-18µm nanocrystalline ultra-thin ribbon is structurally tight.
Soft magnetics have no futures and no unified spot quotes. Price position is proxied by leading companies' gross margin series: Poco Materials' core gross margin peaked at ~41.5% in 2023-2024 → 42.1% in 2025 (full year) → 38.6% in 2026H1 (prospectus-disclosed series low 33.75%); Yunlu Co.'s gross margin ~30.0% in 2025Q1 → 23.5% in 2026H1—indicating falling amorphous ribbon prices, and by more than powder cores. Mid-to-high-end MnZn core purchase unit prices rose +6.84% YoY in 2024/2025 (Yigan Technology ChiNext prospectus, http://reportdocs.static.szse.cn/UpFiles/rasinfodisc1/202608/RAS_202608_2021556BCB7863F4074FB6A6E3D729B11EB100.pdf ), proving mid-to-high-end can still raise prices. China's metal powder core 2025 average price ~RMB 37,400/t (=RMB 7.52 billion ÷ 201kt).
Three-tier pricing mechanism: ① cost floor—low-end ferrite cores sell for only a dozen-odd RMB/kg, close to the "iron oxide red + sintering processing" cash cost; 200+ small producers wage price wars with no pricing power; ② qualification-based oligopoly pricing—after automotive-grade and AI power qualification binding, annual frameworks + quarterly negotiations; high-end part numbers priced far above the expansion incentive line; ③ structural upgrade pricing—high-frequency trends continuously lift per-unit value; industry blended ASP shows a "low-end deflation + high-end inflation" scissors gap.
Pricing framework: cost floor supporting the low end + qualification barriers supporting high-end premiums + supply-demand direction (powder core utilization 94.5%→90%, amorphous 78.8%→81%) + structural upgrade (rising AI/automotive share).
| Quarter | Powder Core Blended ASP (RMB 10k/t) | Other Segments |
|---|---|---|
| 2026Q4 | 3.55-3.70 | Low-end ferrite flat to slightly down; mid-to-high-end MnZn +3~5%; standard amorphous ribbon under pressure -3~5% |
| 2027Q1 | 3.55-3.70 | AI/automotive-grade part numbers +3~5%; 800V magnetics in small-batch ramp |
| 2027Q2 | 3.60-3.75 | Amorphous ribbon declines narrowing (distribution transformer exports as a driver) |
| 2027Q3 | 3.60-3.80 | New capacity at full production pressures the low end; high-end tightness persists |
(Anchor: 2025 China powder core average price RMB 37,400/t; revised down from the initial draft—PV 2026 installation collapse is deeper than previously assumed, and the base-case probability has been adjusted down accordingly.)
(Sources: Platinum New Materials HKEX prospectus coverage, https://www.163.com/dy/article/L1KI8JM60519VPHD.html ; QYResearch soft ferrite core report, https://www.qyresearch.com.cn/reports/6383518/soft-ferrite-core ) Concentration is rising: AI and automotive qualification barriers push orders toward the leaders; mid/low-end ferrite remains fragmented with price wars.
Profits currently sit mainly at the materials end: metal soft magnetic powder cores are the most profitable link in the entire chain (Platinum 2025 gross margin 42.1%, net margin 23.6%, ROE 15.7%; 2026H1 revenue +37.5%), thanks to gas-atomized powder formulation barriers plus first-mover qualification with NVIDIA-chain and leading PV inverter customers. The components end is becoming the second profit pool: AI chip inductors / TLVR inductors carry unit prices and gross margins significantly above traditional powder cores (Platinum's chip inductor gross margin is above the company average). Profit-losing segments: consumer ferrite (Tiantong lost RMB 165 million in 2025 and another RMB 282 million in 2026H1) and amorphous distribution transformer ribbon (Yunlu 2025 net profit -18.4%, 2026H1 attributable net profit -25.8%, non-GAAP -30.1%, squeezed by grid procurement price wars).
Migration direction over the next 2-3 years: profits shift from traditional ferrite / consumer magnetic components toward metal powder cores + AI chip inductors. AI power architectures (48V, TLVR, vertical power delivery) systematically substitute metal soft magnetics for ferrite, with value extending upstream into powders and downstream into customized components. One popular narrative needs correcting: Platinum is No.1 in the powder core materials segment (27.1%), but ranks only fifth globally in AI chip inductors with a 7.6% share (CIC / prospectus basis) — the AI components segment has many competitors, so "biggest profit taker" holds only for the powder core segment.
Strong vs. upstream: raw materials such as iron oxide red, pure iron, and ferrosilicon are commodity inputs with dispersed supply, so materials makers can pass through prices. Tiered vs. downstream: PV inverters (Sungrow / Huawei / Ginlong), automakers/Tier 1s, and data center power supplies (Delta / Lite-On / FSP / Megmeet) are all concentrated large customers, with typical 3-5% annual price-downs and 3-6 month payment terms that erode part of the boom dividend; the AI chain is the exception — TLVR / chip inductors involve customized joint development with scarce supply, so leading vendors' short-term bargaining power flips to strong. This is the core reason current high margins persist, but the premium faces mean-reversion pressure as capacity expansions come online.
Overall moderately favorable, with extreme internal divergence: metal powder cores + AI inductors genuinely make money (sustainability of high ROIC depends on the first-mover AI qualification window); automotive-grade cores are solid but mediocre; consumer ferrite and amorphous distribution transformer ribbon are a boom illusion of revenue growth without profit. Demand boom ≠ good returns — must differentiate by segment.
SWS Magnetic Materials Index (850522.SI, L3): PE 57.7x, ~68th percentile since May 2014 (median 46.96); PB 3.96x, ~79th percentile (median 3.12) (2026-08-31). The sector as a whole is priced richly: the AI magnetics narrative has pushed PB to nearly the 80th percentile of the past decade, but internal divergence is severe — Platinum PE(TTM) 71x (94th percentile over 3 years), Longci PE(TTM) 127x (98th percentile over 5 years), Tiantong PB 4.67x (97th percentile over 5 years) are all clearly overextended; Yunlu PB 3.26x (5th percentile over 5 years) and Sinosteel Tianyuan PB 2.04x (13th percentile over 1 year) sit at historical lows. Boom conclusions must be checked against valuation: industry upcycle × sector valuation at the 79th percentile means beta is partially priced in; excess returns can only come from segment and stock selection.
| Policy | Direction | Status |
|---|---|---|
| MIIT "Catalogue for the First Batch Application Demonstration of Key New Materials (2024 Edition)" + insurance compensation | Positive for high-end soft magnetics adoption | Implemented |
| Four ministries "Implementation Plan for High-Quality Development of Energy-Saving Equipment (2026-2028)": energy-saving transformers to exceed 75% of new additions | Positive for amorphous / nanocrystalline / high-performance ferrite | Implemented |
| GB 20052-2020 transformer energy efficiency standard | Positive for amorphous replacing silicon steel (cross-reference) | Implemented |
| "Action Plan for High-Quality Development of Computing Infrastructure" / East-Data-West-Computing | Positive for data center power magnetics | Implemented |
| China's expanded export controls on dual-use items (rare earths / tungsten / molybdenum, etc.) | Neutral (soft magnetics themselves not on the list) | Implemented |
| US Section 301 tariffs (25% tier on magnetic cores / magnet-containing components) + combined tariff rate ~34% after IEEPA tariffs end in Feb 2026 | Negative for component exports to the US | Implemented; follow-up tools undetermined |
(Sources: MIIT catalogue original text, https://www.ncsti.gov.cn/kjdt/tzgg/202312/t20231225_145433.html ; Economic Information Daily, http://jjckb.xinhuanet.com/20260320/a02a5d9c2f644b46a6f448faec80ae75/c.html ; USTR / Federal Register, https://www.federalregister.gov/documents/2024/09/18/2024-21217/notice-of-modification-chinas-acts-policies-and-practices-related-to-technology-transfer ; MOFCOM & GACC Announcement No. 18 of 2025, https://aqygzj.mofcom.gov.cn/flzc/gzjgfxwj/art/2025/art_f3a1432ba20248eca12ff7b91bc73fda.html )
Net direction is positive: demand-side upgrade drivers (energy efficiency standards + new materials catalogue + computing infrastructure) are significantly stronger than supply-side constraints (magnetic materials are not among the key energy-saving/carbon-reduction industries; no mandatory production cuts). Geopolitical risk is manageable: soft magnetic raw materials (iron oxide red / sendust) face no resource-based geopolitical bottlenecks; the main friction lies in trade channels — Section 301 tariffs suppress direct component exports to the US, pushing Chinese companies overseas (magnetic components: Clik Vietnam/Mexico, Jingquanhua Philippines, per industry media reports), while the materials end faces less de-China pressure due to high technology/capital barriers. Tail risk: a US-China control escalation spiral spilling over into magnet-containing supply chains.
| Scenario | Probability | Narrative | Powder Core Blended ASP |
|---|---|---|---|
| Bear | 0.35 | 2027 AI capex slowdown + PV double-dip; expansion wave meets decelerating demand; high-end shifts from tight to oversupplied | RMB 33,000-35,000/ton (-8~-12%) |
| Base | 0.45 | AI + EV increments absorb most new capacity; "low-end deflation + high-end inflation" scissors gap persists; 800V small batches in 2027, ramp in 2028 | RMB 35,500-38,000/ton range-bound |
| Bull | 0.20 | 800V ramps early + PV recovery; high-end effective capacity cannot keep up with orders | AI-grade +10~15%; blended breaks above RMB 39,000/ton |
| Date/Window | Event | Directional Impact | Related Debate |
|---|---|---|---|
| 2026-10 | A-share Q3 reports (Platinum/Yunlu/Hengdian DMEGC powder core ASP and gross margin) | Validates D2 price resilience | D2 |
| 2026-11 | NVIDIA next-gen platform and 800V ecosystem progress | Sets D1 pace | D1 |
| 2026-12 | North American CSP 2027 capex guidance (earnings season) | AI increment slope | D1 |
| 2027-01 | Full-year 2026 PV installation data and 2027 forecasts | Inflection point for powder cores' traditional downstream | D2 |
| 2027-03 | Annual report season + Platinum HK listing progress | Valuation and dilution | D1/D2 |
| 2027H1 | Tiantong 14,600 tons / Xinlaifu fundraised projects / AT&M nanocrystalline startup progress | Supply landing pace | D2 |
| 2027H2 | 800V Sidecar→native architecture transition validation | Dedicated magnetics from 0 to 1 | D1 |
The matrix reveals the industry's most important structural fact: a bullish boom view ≠ worth buying. The bottom-right quadrant (riding the AI upcycle but with eroding returns) is the "second-tier AI-narrative expanders" — capacity that chases the AI concept without qualification barriers or cost advantages will be hit first in the 2027 expansion wave; while the bottom-left consumer ferrite and amorphous distribution transformer ribbon are the avoid zone, weak in both boom and returns. The only segments genuinely making money are the top-right: AI-grade powder cores + chip inductors, and nanocrystalline ultra-thin ribbon.
Beneficiaries (conditional):
Avoid:
| Scenario | Biggest Beneficiaries | Biggest Losers | One-Line Logic |
|---|---|---|---|
| Bear (0.35) | Sinosteel Tianyuan | Platinum New Materials, Longci Technology | Low-valuation defense outperforms; high-valuation AI narrative suffers a Davis double-kill |
| Base (0.45) | Platinum New Materials (after pullback), Sinosteel Tianyuan | Tiantong, small consumer ferrite makers | Structural upgrade delivers; leader premium persists; low-end shakeout continues |
| Bull (0.20) | Platinum New Materials, AT&M (nanocrystalline) | No clear losers (low-end also lifted) | 800V ramps early; high-end effective capacity fully tight |
Key Information Gap Disclosure: The base year for global soft magnetics market size (RMB 164.5 billion) comes from aggregator sources with wide dispersion across institutions — flagged as "to be verified"; the AI server inductor market size is a secondhand estimate; ferrite nameplate capacity and some balance-sheet figures are estimated assumptions; precise data on domestic substitution rates for high-end power ferrite and nanocrystalline were unavailable. These gaps do not affect directional conclusions but do affect the absolute precision of incremental estimates.
Key Sources: TrendForce (AI server shipments, via Sina Finance repost); EVTank "China New Energy Vehicle Industry Development White Paper (2026)"; Wood Mackenzie global inverter demand warning (via Solarbe repost); Platinum New Materials 2024 annual report and HKEX prospectus (cninfo / Securities Times); Yunlu 2025 annual report summary (cninfo); AT&M investor relations records (cninfo); TDK ferrite materials handbook; NVIDIA 800V HVDC technical blog; MIIT Key New Materials First Batch catalogue; USTR Section 301 Federal Register; SunSirs iron oxide red quotes; SWS Magnetic Materials Index valuation (2026-08-31).