Ibiden Races to Meet Surging AI Substrate Demand with New Production Plant Fueled by NVIDIA Orders

Amid soaring demands for advanced semiconductor substrates, Japanese IC substrate manufacturer Ibiden is ramping up its production capacity, primarily fueled by orders from NVIDIA. The company's president, Koji Kawashima, emphasized the urgency of expanding production to keep pace with the accelerating demand for AI-related substrates. Ibiden's orders for these AI substrates are fully booked, with expectations for this trend to continue through the entirety of next year.

Ibiden is constructing a new substrate plant in Gifu Prefecture, Japan, projected to commence 25% of its planned capacity by the last quarter of 2025. By March 2026, the facility aims to reach 50% capacity. Kawashima notes, however, that this may still fall short of meeting the burgeoning demand as discussions are underway regarding when to activate the remaining production capabilities.

The company's near-exclusive supply of IC substrates for NVIDIA-targeted AI servers underscores its strategic importance in the market. Despite the confidence in its role, Kawashima admits that existing clients are already expressing concerns about future supply capabilities, prompting inquiries into Ibiden’s upcoming investment plans and subsequent capacity expansions.

Founded in 1912, Ibiden boasts a prestigious client roster including industry giants like Intel, AMD, Samsung Electronics, TSMC, and NVIDIA. The specialization required for substrates, which must be tailored to individual chip designs, compels many customers to collaborate with Ibiden from the early stages of their product development.

Foreseeing increased market competition, Kawashima anticipates that while Ibiden currently leads as a sole supplier to NVIDIA for AI applications, other overseas companies could soon enter the arena. However, given the high technical requirements for AI server substrates—such as resistance to thermal deformation—analysts believe new entrants may face challenges in meeting the standards required by NVIDIA.

AI and high-performance computing are anticipated to be primary growth drivers in the IC substrate market. The demand is leading towards substrates with higher layers and larger sizes. According to Ibiden's data, the average size of an AI data center chip's ABF substrate is significantly larger compared to a traditional PC chip. As AI servers fuel this demand, ABF substrates are expected to be the fastest-growing segment in the market, projecting substantial growth as part of the overall substrate industry.