Ibiden, the dominant provider of chip bundle substrates utilized in Nvidia’s cutting-edge semiconductors, could must dial up the tempo of manufacturing capability will increase to maintain up with demand, in accordance with its chief government officer.
Gross sales of the 112-year-old firm’s AI-use substrates are strong with prospects shopping for up all that Ibiden has, CEO Koji Kawashima mentioned, including that that demand is prone to final at the least by means of subsequent yr.
Ibiden is constructing a brand new substrate manufacturing unit in Gifu prefecture, central Japan, anticipated to go surfing at 25 % manufacturing capability across the final quarter of 2025 earlier than reaching 50 % by March 2026. However that is probably not sufficient, Kawashima mentioned. The corporate is in talks about when to get the remaining 50 % capability on-line.
“Our prospects have issues,” he mentioned in an interview. “We’re already being requested about our subsequent funding and the following capability growth.”
Ibiden’s shares rose as a lot as 5.5 % in Tokyo on Monday, their greatest intraday achieve in additional than a month.
Ibiden’s shoppers embody Intel, Superior Micro Units, Samsung Electronics, and Taiwan Semiconductor Manufacturing, in addition to Nvidia, in accordance with information compiled by Bloomberg. A lot of them seek the advice of with the Japanese firm early in product improvement, as a result of the substrates — which assist transmit alerts from semiconductors to the circuit board — have to be tailor-made for every chip. Substrates have to be made to resist the warmth of an Nvidia graphics processing unit to type an AI chip bundle full with parts similar to reminiscence.
Based as an influence utility firm in 1912, Ibiden developed semiconductor experience by means of a partnership with Intel that Kawashima cultivated by ready every single day in entrance of the Santa Clara firm to cease engineers and executives for product suggestions within the early 1990s. At one level, Intel comprised round 70 % to 80 % of Ibiden’s income from chip bundle substrates. That fell to round 30 % within the fiscal yr ended March because the US chipmaker struggled to execute a turnaround that lately noticed the ousting of CEO Pat Gelsinger.
Reliance on Intel has harm Ibiden’s inventory, down round 40 % this yr. In October, Ibiden revised down its revenue outlook after sluggish demand for parts used usually goal servers outweighed AI server-related progress. However whereas noting it was essential to develop enterprise with chipmakers aside from Intel, Kawashima mentioned he was assured Intel will bounce again.
“Intel’s total know-how could be very subtle,” the 61-year-old mentioned. “Intel raised us up and opened so many doorways. Our relationship with Intel will all the time be our treasure, and Intel will endlessly be an essential buyer.”
With many overseas chipmakers unwilling to switch their newest know-how to the US, Intel is prone to play a key function in Washington’s aim to spice up cutting-edge semiconductor manufacturing capabilities at dwelling, Kawashima mentioned. Ibiden itself has no manufacturing services within the US. It has no plans to construct any resulting from the price of labor and logistics, Kawashima mentioned, no matter US president-elect Donald Trump’s plans to impose tariffs on a variety of merchandise.
All of Nvidia’s AI semiconductors now use Ibiden’s substrates, though Taiwanese rivals similar to Unimicron Expertise are eyeing the sphere. However it will not be simple to interrupt Ibiden’s place as dominant provider, in accordance with Toyo Securities analyst Hideki Yasuda.
“Nvidia’s AI chips want subtle substrates, and Ibiden is the one one that may mass produce them at a very good manufacturing yield,” he mentioned. “Taiwanese rivals will not be capable to take Ibiden’s share away by a lot.”
AI semiconductors earn greater than 15 % of Ibiden’s gross sales of round ¥370 billion ($2.three billion or roughly Rs. 19,673 crore), with that proportion anticipated to rise additional. Nvidia’s mentioned it is begun full manufacturing of its next-generation Blackwell chips after encountering some preliminary technical challenges.
Over the long run, Nvidia could face rising competitors from application-specific chips by Marvell Expertise Inc. and Broadcom Inc. in addition to in-house silicon from Alphabet’s Google and Microsoft. In principle, Ibiden ought to be capable to accommodate all of them, as AI chip bundle design and materials will possible stay much like Nvidia’s, in accordance with Kawashima.
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