(Bloomberg) — Ibiden Co., the main supplier of chip-package substrates used in Nvidia Corp.'s cutting-edge semiconductors, may need to dial back the pace of production capacity increases to keep up with demand, according to its chief executive. officer
Read More from Bloomberg
Sales of the 112-year-old company's AI consumable substrates are robust with customers buying everything Ibiden has, CEO Koji Kawashima said, adding that demand is likely to last at least through next year.
Ibiden is building a new substrate factory in Gifu prefecture, central Japan, expected to go online at 25% production capacity around the last quarter of 2025 before reaching 50% by March 2026. But that may not be enough, Kawashima said. The company is talking about when to get 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.”
Ibiden shares rose as much as 5.5% in Tokyo on Monday, their biggest intraday gain in more than a month.
Ibiden's clients 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 transfer signals from semiconductors to the circuit board – need to be tailored for each chip. Substrates must be made to withstand the heat of Nvidia's graphics processing unit to form an AI chip package along with components such as memory.
Founded as a power utility company in 1912, Ibiden developed semiconductor expertise through a partnership with Intel that Kawashima nurtured by waiting daily in front of the Santa Clara company to stop engineers and executives for product feedback in the early 1990s. At one point, Intel comprised about 70% to 80% of Ibiden's revenue from chip package substrates. That fell to around 30% in the financial year that ended in March as the US chipmaker struggled to achieve a turnaround that saw CEO Pat Gelsinger recently ousted.
Reliance on Intel has hurt Ibiden's stock, down about 40% this year. In October, Ibiden revised its profit forecast after sluggish demand for components used in general-purpose servers outweighed growth associated with AI servers. But noting that it's important to expand business with chipmakers other than Intel, Kawashima said he's confident Intel will bounce back.