Ibiden: Accelerating Expansion to Capitalize on the Growing AI Server IC Board Market

Ibiden, a Japan-based IC substrate manufacturer, is ramping up its production capacity in response to the rising demand for AI server IC boards, driven by the increasing adoption of generative AI applications. The company, which currently commands over 50% of the market share in server (including AI and standard) IC boards, is taking strategic steps to maintain its market leadership and capitalize on the growing demand for high-value-added IC boards required for generative AI applications.

In a recent announcement, Ibiden President Takeshi Aoki highlighted the company's commitment to increasing its substrate production capacity to 2.1 times that of the fiscal year 2019 target by fiscal year 2025. Although this plan has been put on hold due to challenging market conditions, Ibiden remains dedicated to expanding its production capacity to meet the growing demand for AI server IC boards.

One of the key factors driving Ibiden's expansion is the high demand for generative AI, which is a significant driver for the company's IC boards. The Ono factory, capable of producing various boards, will commence operations as scheduled in fiscal year 2025, taking over some of the production originally planned for the Gama plant. The dedicated production line for AI server boards will be introduced to the Ono plant, allowing Ibiden to better meet the growing demand for these boards.

Ibiden's partnership with TSMC in the 3DFabric Alliance is another critical factor in the company's expansion plans. By joining this alliance, Ibiden will leverage TSMC's Open Innovation Platform (OIP) ecosystem and 3Dblox standards to increase the production capacity of IC boards required for advanced process chips. This collaboration will enable Ibiden to enhance its capabilities in producing next-generation boards, including those for 3D packaging, which are crucial for the AI infrastructure market.

The growing demand for AI server IC boards is also reflected in the company's market share and growth projections. Ibiden currently commands over 50% of the market share in server (including AI and standard) IC boards, surpassing other board manufacturers such as Shinko Electric and AT&S. President Takeshi Aoki estimates that the sales volume of IC boards related to generative AI, measured by board area, will triple in fiscal year 2024 compared to fiscal year 2023.

The future outlook for the AI server IC board market is promising, with Ibiden predicting a 40% growth in related areas by 2027. While PC board usage will slightly decrease, standard server board usage is expected to grow by 30%. However, the most significant growth is anticipated in the AI server board segment, which, despite contributing almost no revenue in 2022, is expected to account for nearly 30% of the overall server board revenue by 2027.

In conclusion, Ibiden's strategic expansion plans, driven by the growing demand for AI server IC boards and supported by its partnership with TSMC in the 3DFabric Alliance, position the company as a strong competitor in the AI server IC board market. By focusing on next-generation boards, collaborating with industry leaders, and increasing production capacity, Ibiden can maintain its market dominance and continue to secure high-value orders for its products. Investors should consider Ibiden as a promising opportunity in the AI infrastructure market, as the company is well-positioned to capitalize on the growing demand for AI server IC boards.