2026-08-28

Organosilicon: Farewell to Cutthroat Competition! AI Computing Power and Robot Skin Are Igniting New Demand

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Is Organosilicon Still Synonymous with "Price Wars" and "Inventory Glut"? It's Time to Update Your Thinking!

 

After a prolonged period of cutthroat, low-price competition, the organosilicon industry is reaching a critical inflection point for profit recovery. Even more exciting is the fact that beyond traditional photovoltaic and automotive applications, emerging sectors such as AI computing infrastructure and humanoid robot "skin" are becoming new engines of demand.

Supply Side: Giants Cut Production as the Global Landscape Shifts

 

Leading domestic producers have finally grown tired of the race to the bottom, actively cutting production and raising prices. Industry operating rates have fallen to low levels, and inventory pressure has been substantially relieved. At the same time, overseas chemical giants are accelerating capacity shutdowns due to soaring energy costs and new environmental regulations. The global supply crunch is intensifying, and the door to replacement opportunities has been thrown wide open for Chinese producers!

 

Since late 2025, the domestic organosilicon industry has held multiple meetings centered on restoring profitability, with companies reaching a consensus on production cuts. In 2026, the industry as a whole has continued to implement its "cut production, raise prices" strategy, pushing operating rates down to around 60%, effectively easing inventory pressure. The average domestic price of dimethylcyclosiloxane (DMC) has risen from a low of roughly RMB 11,000 per tonne in October 2025 to around RMB 15,000 per tonne, and industry profitability has begun to recover.

 

Overseas, Dow has announced that starting mid-2026 it will gradually shut down 145,000 tonnes per year of DMC capacity at its UK plant, with full exit expected by the end of 2027. Influenced by the EU's REACH environmental regulations and high energy costs, international giants such as Wacker are also scaling back capacity. This accelerating overseas capacity exit has opened up vast export-replacement opportunities for Chinese companies with clear cost advantages, further lifting the industry's profit center.

 

Demand Side: From "Steady Traditional" to "Explosive Emerging"

 

Beyond steadily growing demand from new energy vehicles (a single NEV uses roughly 8 times as much organosilicon as a conventional gasoline car) and photovoltaics, new opportunities have arrived!

 

AI computing infrastructure is becoming a new engine of organosilicon demand. As AI server power keeps climbing, immersion cooling is emerging as the mainstream trend. With its high thermal conductivity, high insulation, and safety, organosilicon coolant is poised to become the next-generation ideal medium. In addition, AI data center construction is driving demand for optical fiber preforms, and high-purity silicon tetrachloride — a core raw material — is expected to face a global supply gap of 35,000 to 40,000 tonnes in 2026.

 

Humanoid robots open a new, high-value-added application for organosilicon. Robots require materials that are simultaneously soft, biocompatible, temperature-resistant, and insulating — organosilicon is one of the few polymers capable of meeting all these requirements. For example, low-hardness liquid silicone rubber (LSR) can be made into biomimetic "electronic skin," giving robots tactile perception, while high-reliability sealing materials, thermal interface materials, and silicone-based adhesive encapsulants are indispensable for robot joint sealing, chip cooling, and overall assembly.

 

## The Inflection Point Is Here — How to Capitalize?

 

Under the triple resonance of "cost support + supply contraction + surging demand," the organosilicon industry is shifting from blind capacity expansion toward orderly development. As the price center of core products like DMC moves higher, profit margins across the industry are being continuously restored. In the first half of 2026, multiple A-share silicone companies posted strong profit forecasts: Dongyue Silicone expected first-half net profit attributable to shareholders to surge over 900% year-on-year, and Xin'an Chemical expected growth of over 240% — both validating that the profit recovery logic is materializing.

 

This is no longer a simple cyclical rebound, but a structural opportunity born from a reshaping of the industry landscape. Going forward, margins on pure commodity DMC and architectural silicone sealants will be squeezed. The way forward lies in repositioning your business around "four asset classes": monomer recycling assets, intermediate price-stabilization assets, silicone rubber sovereignty assets (such as new-energy OEM spec, medical certification, and robot skin), and silicone oil/resin/silane crossover assets (such as AI thermal management and semiconductor packaging).

 

Of course, some risks still warrant attention. For instance, the cancellation of export tax rebates for polysiloxanes may create short-term export pressure, and if leading companies adjust production schedules once profitability improves, that could alter the supply picture. That said, overall, the organosilicon industry is moving from past cutthroat competition toward orderly development. Driven by new demand from AI, robotics, and other applications, a new industry cycle with greater vitality and profitability is beginning.

 

**Disclaimer:** The content herein is sourced from public channels such as the internet and is provided for reference only. We maintain a neutral stance on the views expressed. Market price fluctuations are influenced by multiple factors; actual transaction prices should be determined through negotiation between the parties.

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