(Bloomberg) — Ibiden Co., the dominant supplier of chip package substrates used in Nvidia Corp.’s cutting-edge semiconductors, may need to dial up the pace of production capacity increases to keep up with demand, according to its chief executive officer.
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Sales of the 112-year-old company’s AI-use substrates are robust with customers buying up all that Ibiden has, CEO Koji Kawashima said, adding that 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’s in talks about when to get the remaining 50% capacity online.
“Our customers have concerns,” he said in an interview. “We’re already being asked about our next investment and the next capacity expansion.”
Ibiden’s 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 with the Japanese company early in product development, because the substrates — which help transmit signals from semiconductors to the circuit board — need to be tailored 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 a power utility company in 1912, Ibiden developed semiconductor expertise through a partnership with Intel that Kawashima cultivated by waiting every day in front of the Santa Clara company to stop engineers and executives for product feedback in the early 1990s. At one point, Intel comprised around 70% to 80% of Ibiden’s revenue from chip package substrates. That fell to around 30% in the fiscal year ended March as the US chipmaker struggled to execute a turnaround that recently saw the ousting of CEO Pat Gelsinger.
Reliance on Intel has hurt Ibiden’s stock, down around 40% this year. In October, Ibiden revised down its profit outlook after sluggish demand for components used in general purpose servers outweighed AI server-related growth. But while noting it was important to expand business with chipmakers other than Intel, Kawashima said he was confident Intel will bounce back.
