(Bloomberg) — Ibiden Co., the dominant supplier of chip package substrates used in Nvidia Corp.’s advanced semiconductors, may need to accelerate the pace of increasing its production capacity to meet demand , according to its general director. officer.
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Sales of the 112-year-old company’s AI substrates are robust, with customers buying everything Ibiden has, CEO Koji Kawashima said, adding that demand is expected to last at least until next year.
Ibiden is building a new substrate factory in Gifu Prefecture, central Japan, which is expected to come online at 25% production capacity around the last quarter of 2025 before reaching 50% by March 2026. But that might not be enough, Kawashima said. The company is in talks about when it will bring the remaining 50% of capacity online.
“Our customers have concerns,” he said in an interview. “We are already being asked about our next investment and the next capacity expansion.”
Shares of Ibiden rose 5.5% in Tokyo on Monday, their biggest intraday rise in more than a month.
Ibiden’s customers include Intel Corp., Advanced Micro Devices Inc., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., as well as Nvidia, according to data compiled by Bloomberg. Many of them consult the Japanese company early in product development, because the substrates – which help transmit signals from the semiconductors to the circuit board – must be matched to each chip. Substrates must be designed to withstand the heat of an Nvidia graphics processing unit to form a complete AI chip package with components such as memory.
Founded as an electric utility company in 1912, Ibiden developed expertise in semiconductors through a partnership with Intel that Kawashima cultivated by waiting outside the Santa Clara company every day to arrest engineers and executives for product feedback in the early 1990s. At one point, Intel accounted for about 70 to 80 percent of Ibiden’s revenue from chip package substrates. That figure fell to around 30% in the fiscal year ending March as the U.S. chipmaker struggled to implement a turnaround that recently saw the ouster of CEO Pat Gelsinger.
Dependence on Intel has hurt Ibiden’s stock, down about 40% this year. In October, Ibiden lowered its earnings outlook after weak demand for components used in general-purpose servers outpaced growth linked to AI servers. But while emphasizing the importance of expanding business with chipmakers other than Intel, Kawashima said he was confident in Intel’s ability to bounce back.