Nvidia supplier Ibiden considers accelerating its growth plans to meet rising AI chip demand – Bloomberg.
Ibiden Co., a key supplier of chip package substrates for Nvidia’s advanced semiconductors, is considering accelerating its production expansion to meet surging demand for artificial intelligence (AI) technology. According to CEO Koji Kawashima, the Japanese company’s AI substrate sales are booming, with customers snapping up all available stock—a trend expected to persist through next year.
Currently constructing a new substrate factory in Gifu, Japan, Ibiden aims to start operations at 25% capacity by late 2025 and reach 50% by March 2026. However, Kawashima revealed that these projections might fall short of demand, leading to discussions about speeding up the remaining expansion phases.
“Our clients are already asking about our next steps,” Kawashima said. This heightened demand reflects the critical role of Ibiden’s substrates in transmitting signals within semiconductors used in AI chip packages. The materials must endure high heat from Nvidia’s cutting-edge graphics processors, ensuring compatibility with AI technologies.
Boost in Market Performance
On Monday, Ibiden’s shares surged by 5.5% in Tokyo, marking their most significant intraday increase in over a month. The company’s prestigious client roster includes tech giants such as Intel, AMD, Samsung, and TSMC. Nvidia, however, stands as a pivotal partner, relying exclusively on Ibiden’s expertise for its AI chips.
Despite its strong foothold, Ibiden faces rising competition from Taiwanese firms like Unimicron Technology Corp. Still, analysts like Hideki Yasuda from Toyo Securities believe Ibiden’s production efficiency and quality give it an unassailable edge.
“Nvidia’s AI chips require intricate substrates, and Ibiden is the only supplier capable of mass production with reliable yields,” Yasuda said.
Historical Ties with Intel
Founded in 1912 as a power utility, Ibiden transitioned into semiconductor manufacturing with Intel’s support in the 1990s. Kawashima’s persistence in building this partnership—reportedly waiting outside Intel’s headquarters for feedback—helped establish Ibiden as a leading player.
However, Intel’s recent struggles have impacted Ibiden, with Intel-related revenue dropping from 70-80% of its substrate sales to just 30% by March. Despite this, Kawashima expressed confidence in Intel’s future, crediting the company for opening global opportunities for Ibiden.
“Intel raised us and remains a treasured partner,” he said.
Navigating Global Challenges
While AI substrates now contribute over 15% of Ibiden’s $2.3 billion annual revenue, the company refrains from setting up U.S. factories due to high costs, despite geopolitical shifts urging domestic production in the U.S. Rivals like Marvell, Broadcom, and even in-house developments by Google and Microsoft pose potential long-term competition to Nvidia. Nevertheless, Kawashima remains optimistic about Ibiden’s adaptability, emphasizing that future AI chip designs will likely align with current technologies.
With Nvidia ramping up production of its next-generation Blackwell chips, Ibiden is set to ride the AI wave, reaffirming its dominant market position as it scales operations to meet the growing needs of the tech world.
