Key Findings
As the demand for AI accelerators skyrockets, a critical shortage of indispensable ABF (Ajinomoto Build-up Film) substrates is casting a significant shadow over the industry. Current projections indicate that the ABF substrate supply deficit could reach approximately 10% by late 2026, escalate to about 21% by 2027, and potentially surpass 40% by 2028. In response, major suppliers such as Ibiden, Unimicron, and Samsung Electro-Mechanics are aggressively planning and executing multi-billion dollar capital investments to rapidly expand their production capacities.
Technical / Clinical Details
ABF substrates are crucial packaging materials that enable high-speed signal transmission and high-density wiring in high-performance AI chips and server processors. Their scarcity directly impedes the scaling of AI semiconductor production. In this critical situation, companies are advancing concrete expansion plans:
- Ibiden (Japan): Plans to invest ¥500 billion (approximately $3.1 billion) between 2026 and 2028, aiming to expand its production capacity for AI server substrates by 2.8 times compared to 2024 levels.
- Unimicron (Taiwan): Is increasing its capital expenditure for 2026 to a record NT$34 billion (approximately $1.07 billion), primarily focusing on ABF substrate production.
- Samsung Electro-Mechanics (South Korea): Is investing $1.2 billion in ABF substrate production, with mass production targeted to commence by the third quarter of 2027.
Furthermore, Ajinomoto (Japan), which commands over 95% of the ABF film market, was already operating at full capacity in Q2 2026. Due to severe demand pressure, the company notified customers of an approximate 30% price increase in May of the same year, indicating that raw material supply constraints and rising costs are propagating throughout the entire supply chain.
Background & Context
The increasing complexity and scale of AI models are continually raising performance requirements for AI accelerators. This necessitates integration with High Bandwidth Memory (HBM) and larger chip designs to accommodate more transistors, consequently demanding larger and more complex ABF substrates. However, ABF substrate manufacturing requires advanced technology, specialized equipment, and long lead times, making it challenging to respond to the rapid surge in demand. A key factor contributing to this bottleneck is the concentrated supply of ABF film, with Ajinomoto being virtually the sole supplier.
Strategic Significance & Outlook
While the substantial capital investments by leading manufacturers are expected to alleviate the long-term supply shortage, it will take time for these investments to translate into actual market capacity. The severe supply deficit projected through 2028 could significantly impact the growth trajectory of the entire AI semiconductor industry. A stable supply of ABF substrates is crucial for building next-generation AI infrastructure, necessitating further collaboration and investment to enhance overall supply chain resilience. Additionally, diversification of material suppliers and the development of alternative materials will be critical challenges moving forward.
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