Ibiden Co. Faces Rising Demand for AI Chip Substrates
Meeting the Needs of Cutting-Edge Semiconductors
Ibiden Co., the leading supplier of chip package substrates for Nvidia Corp.’s advanced semiconductors, is under pressure to increase production capacity to meet surging demand. According to CEO Koji Kawashima, the company’s substrates are selling out quickly, with customers clamoring for more.
Robust Sales and Expanding Capacity
The 112-year-old company is building a new substrate factory in central Japan, set to begin production at 25% capacity by the end of 2025 and reach 50% by March 2026. However, Kawashima believes this may not be enough to satisfy customer demand, which is expected to persist through next year. Discussions are underway to bring the remaining 50% capacity online sooner.
Customer Concerns and Future Investments
Kawashima noted that customers, including Intel Corp., Advanced Micro Devices Inc., and Taiwan Semiconductor Manufacturing Co., are already inquiring about future investments and capacity expansions. This has led to a significant increase in Ibiden’s shares, with a 5.5% intraday gain in Tokyo.
Early Collaboration and Customization
Ibiden’s clients consult with the company early in product development, as substrates must be tailored to each chip’s specific needs. For instance, substrates for Nvidia graphics processing units require specialized design and materials to withstand high temperatures.
A Partnership Born from Perseverance
Ibiden’s semiconductor expertise was developed through a partnership with Intel, which Kawashima fostered by waiting outside the company’s Santa Clara offices to gather feedback from engineers and executives in the early 1990s. This partnership once accounted for 70-80% of Ibiden’s revenue but has since decreased to around 30%.
Diversification and Confidence in Intel
While Ibiden is working to expand its business with other chipmakers, Kawashima remains confident in Intel’s ability to bounce back. He believes Intel’s sophisticated technology and importance to Washington’s goal of boosting domestic semiconductor production will ensure its continued relevance.
Ibiden’s Dominant Position
Despite competition from Taiwanese rivals, Ibiden’s position as the dominant supplier of AI chip substrates remains secure. According to Toyo Securities analyst Hideki Yasuda, Ibiden’s ability to mass produce sophisticated substrates at a high yield makes it difficult for competitors to gain significant market share.
Growing Demand and Long-Term Potential
AI semiconductors currently account for over 15% of Ibiden’s sales, with this percentage expected to rise further. As demand for AI technology continues to grow, Ibiden is well-positioned to accommodate the needs of its customers, including potential new entrants in the market.
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