(Bloomberg) — Ibiden Co., the dominant supplier of chip package substrates used in Nvidia Corp.’s advanced semiconductors, may have to increase the pace of production capacity to meet demand, its CEO said. officer.
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Sales of the 112-year-old company’s AI utility substrates are robust, with customers buying up everything Ibiden has, CEO Koji Kawashima said, adding that that demand will likely continue 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% in March 2026. But that may not be enough, Kawashima said. The company is in discussions about when the remaining 50% capacity will come online.
“Our customers are concerned,” he said in an interview. “Questions are already being asked about our next investment and the next capacity expansion.”
Shares of Ibiden rose as much as 5.5% in Tokyo on Monday, the biggest intraday gain 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 with the Japanese company early in product development, because the substrates – which help transmit signals from semiconductors to the printed circuit board – must be custom-made for each chip. Substrates must be made to withstand the heat of an Nvidia graphics processing unit to form an AI chip package, complete with components such as memory.
Founded as an energy company in 1912, Ibiden developed semiconductor expertise through a partnership with Intel that Kawashima cultivated by waiting every day for the Santa Clara company in the early 1990s to retain engineers and executives for product feedback. At one point, Intel represented about 70% to 80% of Ibiden’s revenue from chip package substrates. That fell to about 30% in the fiscal year ended in March as the U.S. chipmaker struggled to implement a turnaround that recently led to the ousting of CEO Pat Gelsinger.
The dependence on Intel has hurt Ibiden’s shares, down about 40% this year. In October, Ibiden cut its earnings outlook after sluggish demand for components used in general-purpose servers outpaced growth in AI servers. But while Kawashima noted it was important to expand business with chip makers other than Intel, he said he was confident Intel will recover.