Amid a surge in demand for AI chip package substrates, Ibiden Co., a significant supplier for Nvidia Corp. NVDA, is evaluating the possibility of hastening its production capacity expansion. This move comes as the company aims to keep pace with the growing needs of the AI industry.
What Happened: CEO Koji Kawashima of Ibiden revealed that the demand for AI-use substrates remains robust, with all available stock being snapped up by customers. This trend is anticipated to continue into the next year. Currently, Ibiden is in the process of building a new substrate factory in Gifu, Japan, which is slated to commence operations at 25% capacity by late 2025, eventually reaching 50% by March 2026.
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Nevertheless, Kawashima noted that even this planned capacity might fall short, prompting discussions on when to activate the remaining 50% capacity. Ibiden’s clientele includes industry giants such as Intel Corp. INTC, Advanced Micro Devices Inc. AMD, Samsung Electronics Co. SSNLF, and Taiwan Semiconductor Manufacturing Co. TSM, alongside Nvidia.
Despite facing challenges, Kawashima expressed optimism about Intel’s recovery, underscoring the importance of their partnership. Meanwhile, Taiwanese competitors are eyeing the AI substrate market, but Ibiden’s stronghold remains intact, as highlighted by Toyo Securities analyst Hideki Yasuda.
Why It Matters: The potential acceleration of Ibiden’s expansion comes amid broader industry concerns and opportunities. Recently, Doug Lefever, CEO of Advantest, another key supplier of Nvidia, warned of a possible slowdown in AI spending by major U.S. tech companies, which could disrupt the semiconductor supply chain.
Lefever described the potential downturn as possibly "vicious" due to cyclical market dynamics.
This cautionary note contrasts with the optimism expressed by Broadcom Inc. AVGO CEO Hock Tan, who foresees a decade-long AI chip boom fueled by investments from tech giants like Alphabet Inc., Meta Platforms Inc., and ByteDance. As Ibiden considers ramping up its production, it navigates a complex landscape of potential risks and opportunities within the AI sector.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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