(July 18, 2026) Significant progress has been made in the field of advanced organic silicone processing in China. Several leading silicone material companies, in collaboration with research institutions, have successfully verified the entire production process for continuous mass production of electronic-grade low-cyclohydroxysilicone oil. The quality of this product meets international standards in three key aspects: precise control of hydroxyl content, reduction of cyclohydrocarbon residues, and minimal levels of metal ion impurities. With the growing demand for these products in sectors such as new energy, AI technology, and medical applications, China’s hydroxysilicone oil industry has officially entered a new stage characterized by high-quality alternatives.
Hydroxysilicone oil, commonly known as 107 glue, is a core intermediate in the organic silicone industry chain. Its active hydroxyl groups enable it to be cross-linked to produce various products such as silicone rubber, potting compounds, textile finishing agents, and electronic thermal conductive gels. It is widely used in fields including photovoltaic packaging, new energy vehicle electronics, semiconductor packaging, and medical supplies, making it an essential basic raw material for the new materials industry. Previously, China had sufficient production capacity for low-end general-purpose hydroxysilicone oil; however, high-purity products with narrow molecular weight distributions and ultra-low cyclohydrocarbon content have long relied on imports. The stability of product batches and the control of trace impurities have always represented significant challenges for the industry.
The key breakthroughs in this technological advancement are reflected in three main areas:Firstly, the molecular structure is precisely controllable. The new cationic ring-opening polymerization method, combined with thin-film evaporation purification technology, ensures that the variation in hydroxyl value error is within ±2mgKOH/g, and the molecular weight distribution index (PDI) is less than 1.12. This addresses the issue of significant batch performance differences in traditional batch production methods. For the cosmetics and medical industries, the total residue of D4/D5 rings in the products is consistently below 80ppm, meeting the new regulations that prohibit the use of D4 in cosmetics by 2027.
Secondly, a green and low-carbon continuous production line has been implemented. A new halogen-free catalytic system has replaced the traditional acidic catalysts, increasing the raw material conversion rate to 96.5% and reducing the comprehensive energy consumption per ton of product by 28%. The recycling rate of wastewater by-products exceeds 92%, meeting the new standards for clean silicone production. The adoption rate of continuous automated production lines has increased to 58%, leading to a 40% improvement in production efficiency compared to traditional batch systems, effectively alleviating the shortage of high-end products.
Thirdly, ultra-high purity electronic-grade products are now being mass-produced. The total metal ion content is controlled within 1ppm, and the volatile organic compounds (VOC) level is less than 0.8%. These products can be directly used in liquid cooling encapsulation adhesives for AI servers and potting materials for power devices.Leading domestic photovoltaic and energy storage companies have completed batch substitution tests, which have reduced the delivery cycle compared to imported products by 7-15 days and lowered the overall procurement cost by 18%-24%.
Looking at market supply and demand data, the total domestic hydroxysilicone oil production capacity in 2026 is expected to be around 315,000 tons, but the newly added high-end, high-purity production capacity is only 25,000 tons, resulting in a structural shortage in the market. Industry analysts predict that the overall domestic hydroxysilicone oil market size will exceed 6.2 billion yuan this year, representing a year-on-year increase of 8.2%. Among this, the growth rate of high-activity hydroxysilicone oil specifically for electronics and new energy applications is expected to exceed 22%, becoming the core driving force for growth. Customs data shows that the import dependency on high-end hydroxysilicone oil has decreased from 19.6% in 2021 to 8.4% in 2025, and it is anticipated that imports of special types will further decline by 23% in 2026, indicating a clear trend towards domestic substitution.
At the policy level, there are multiple benefits supporting this industry. The "First Batch of Key New Materials Application Demonstration Catalogue" includes high-purity hydroxysilicone oil used in semiconductor packaging as a supported category, and the additional deduction ratio for research and development expenses on silicone deep processing has been increased to 200%. Many regions are providing one-time subsidies to companies certified for medical-grade silicone materials, encouraging them to invest more in research and development of high-end products. As a result, the industry's R&D investment intensity has increased to 4.3%.At the same time, the adjustment of export tax rebate policies for primary polysiloxanes is accelerating the elimination of low-value-added and low-end production capacity within the industry. Market competition is shifting from pure price competition to a focus on technology, purity, and customized services.
New application scenarios in the downstream sector are continuously expanding: there is a growing demand for electric control sealants in new energy vehicles and weather-resistant packaging materials for photovoltaic components; there is an additional demand for immersion cooling silicone gels and flame-retardant sealing putties in AI computing centers; the purchase volume of medical silicone gels and high-end hair care agents using low-irritating hydroxysilicon oils is steadily increasing, opening up long-term growth prospects for the industry.
Industry experts predict that the development of the hydroxysilicon oil industry will follow two main trends over the next two years: first, leading integrated companies will continue to expand their production of high-purity specialty products, further increasing industry concentration; second, differentiated modified products will become the mainstream of research and development, with new types of specialty silicons such as phenol-hydroxy modified and single-end active hydroxysilicon oils being gradually industrialized, breaking the dominance of foreign companies in the field of high-end modified intermediates. With the continuous advancement of domestic technology, it is expected that China will achieve full autonomy and control over high-end hydroxysilicon oils by 2028, thereby boosting the value of the entire domestic silicone industry chain.With the triple resonance of technology, policy, and downstream demand, the domestic hydroxysilicone oil industry has completed its transformation from "mass production" to "precision manufacturing." The mass production of high-purity, low-cyclic products will effectively ensure the safety of the supply chains in the new energy and semiconductor industries, thereby promoting the advancement of China's silicone material industry towards the higher end of the global value chain.
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