Key Findings
The global surge in AI computing infrastructure is driving a rapid increase in demand for high-performance processors such as GPUs, CPUs, and ASICs. As a direct consequence, the ABF (Ajinomoto Build-up Film) substrate industry is projected to face supply shortages beginning in 2026, with the deficit expected to deepen through 2027 and 2028. In response to this, major IC substrate manufacturers across Taiwan, Japan, and Korea have reportedly secured order visibility extending as far as 2029-2030. To address this unprecedented demand, companies including Ibiden, Unimicron, Kinsus, Nan Ya Printed Circuit Board, Leading, and Samsung Electro-Mechanics have initiated new rounds of equipment expansion investments.
Technical Details
ABF substrates are crucial insulating films used in the packaging of high-performance logic ICs, such as CPUs, GPUs, and ASICs, and are indispensable for advanced packaging processes involving multiple layers and fine pitch interconnections. As AI chips demand larger packages and higher integration densities, ABF substrates require more layers and greater surface area, leading to increased consumption. For instance, 2.5D/3D packaging incorporating High-Bandwidth Memory (HBM) necessitates complex routing patterns to connect multiple chips and a robust substrate structure to support them. ABF materials play a vital role in achieving both fine circuit formation and high electrical performance.
Background & Context
ABF substrate shortages previously occurred between 2021 and 2022, with supply falling approximately 20% short of demand. While new capacity coming online in 2023 was expected to alleviate the shortage temporarily, the current explosion in AI demand is consuming ABF substrates at a far greater pace. This shortage represents an underestimated yet critical bottleneck in the AI chip supply chain, potentially limiting the output of CPUs, GPUs, and network silicon even when sufficient die capacity exists. Ajinomoto’s near-monopoly, holding approximately 95% of the global ABF market, exacerbates the severity of the supply issue.
Strategic Significance & Outlook
The ABF substrate shortage is likely to impact AI chip production schedules and drive up prices in the short term. However, the substantial capital expenditures by various manufacturers are expected to improve supply capabilities in the medium to long term. As companies in Taiwan, Japan, and Korea accelerate their investments, ABF substrate production capacity is anticipated to increase gradually. Nevertheless, depending on the continued growth of demand, tight supply conditions may persist. This situation will further strengthen collaborative relationships between material suppliers and IC substrate manufacturers, encouraging strategic investments to enhance the resilience of the entire supply chain.
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