Ibiden, a key supplier of chip package substrates for Nvidia’s advanced semiconductors, may need to ramp up its production capacity more quickly to meet surging demand, according to CEO Koji Kawashima.
The 112-year-old company is seeing robust sales of its AI-focused substrates, with customers purchasing all that Ibiden can produce. Kawashima indicated that this demand is likely to remain strong through at least next year.
Ibiden is currently constructing a new substrate factory in Gifu Prefecture, Japan, expected to begin production at 25% capacity by the end of 2025, ramping up to 50% by March 2026. However, the company is contemplating increasing this pace, as customer concerns about future capacity growth have already emerged. “We are already being asked about our next investment and the next capacity expansion,” Kawashima said in an interview.
Shares of Ibiden surged as much as 5.5% on Monday in Tokyo, marking the largest intraday gain in over a month.
Ibiden counts major companies such as Intel, AMD, Samsung, TSMC, and Nvidia as clients. The company is a critical player in the semiconductor industry, providing substrates tailored for each chip to help transmit signals from semiconductors to circuit boards. These substrates must withstand the heat of Nvidia’s GPUs to create AI chip packages, which also include components like memory.
Founded in 1912 as a power utility, Ibiden’s semiconductor expertise grew from a partnership with Intel, cultivated by Kawashima’s daily efforts in the 1990s to gain feedback from Intel engineers. At its peak, Intel accounted for around 70%-80% of Ibiden’s revenue from chip package substrates. This share has since dropped to about 30%, partly due to Intel’s struggles to regain momentum under CEO Pat Gelsinger’s leadership.
Despite this, Ibiden remains confident in Intel’s long-term prospects. “Intel’s overall technology is very sophisticated,” said Kawashima. “Intel raised us up and opened so many doors. Our relationship with Intel will always be our treasure, and Intel will forever be an important customer.”
While reliance on Intel has impacted Ibiden’s stock price, which has dropped around 40% this year, the company’s future is closely tied to AI. Despite some challenges in general-purpose server demand, Ibiden expects strong growth in AI-related components.
Ibiden’s substrates are used in all of Nvidia’s AI semiconductors. Taiwanese competitors like Unimicron Technology Corp. are entering the field, but Toyo Securities analyst Hideki Yasuda believes Ibiden’s dominant position will remain secure due to its ability to mass-produce sophisticated substrates with high production yields.
AI semiconductors now account for over 15% of Ibiden’s ¥370 billion ($2.3 billion) in annual sales, with that share expected to grow. As Nvidia prepares to ramp up production of its next-generation Blackwell chips, demand for Ibiden’s substrates is set to increase even further.
Ibiden also faces competition from companies like Marvell Technology and Broadcom, as well as in-house silicon from Google and Microsoft. However, Kawashima believes that the design and materials for AI chip packages will likely remain similar, allowing Ibiden to cater to a diverse range of AI chipmakers.
