Ibiden Co., the leading supplier of chip package substrates for Nvidia Corp.’s advanced semiconductors, may need to accelerate its production capacity expansion to meet surging demand, according to CEO Koji Kawashima. The 112-year-old company’s AI-focused substrates are in high demand, with customers purchasing all available stock, a trend Kawashima expects to continue at least next year.
Ibiden is building a new substrate facility in Gifu Prefecture, central Japan, and plans to begin operations at 25% capacity in late 2025 and reach 50% capacity by March 2026. However, Kawashima indicated this might not suffice, as discussions are underway to determine when to activate the remaining 50% capacity.
“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 surged by as much as 5.5% in Tokyo on Monday, marking the most significant intraday gain in over a month.
According to Bloomberg data, the company’s clients include major players such as Intel Corp., Advanced Micro Devices Inc., Samsung Electronics Co., Taiwan Semiconductor Manufacturing Co., and Nvidia. Many of these companies collaborate with Ibiden early in product development because they need to customize the substrates for each chip. These substrates will withstand the heat generated by Nvidia’s graphics processing units, which are essential for AI chip packages that include components like memory.
Founded in 1912 as a power utility, Ibiden developed its semiconductor expertise through a partnership with Intel. CEO Koji Kawashima cultivated this relationship in the early 1990s by regularly meeting with Intel engineers and executives to gather product feedback. At one point, Intel accounted for 70% to 80% of Ibiden’s chip package substrate revenue. However, this share dropped to about 30% in the fiscal year ending March as Intel struggled to recover, resulting in the recent departure of CEO Pat Gelsinger.
Ibiden’s reliance on Intel has negatively impacted its stock, which has fallen around 40% this year. In October, the company lowered its profit forecast after weak demand for components used in general-purpose servers offset growth in AI server components. Despite this, Kawashima remains confident that Intel will recover and that expanding partnerships with other chipmakers is important for Ibiden’s future.
“Intel’s overall technology is very sophisticated,” the Kawashima said. “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.”
Kawashima stated that with many foreign chipmakers hesitant to transfer their latest technologies to the US, Intel will play a crucial role in helping Washington achieve its goal of enhancing domestic semiconductor production capabilities. Ibiden, however, has no manufacturing facilities in the US and has no plans to build them due to the high labor and logistics costs, regardless of US President-elect Donald Trump’s intentions to impose tariffs on various products.
Nvidia’s AI semiconductors currently use Ibiden’s substrates, although Taiwanese competitors like Unimicron Technology Corp. are eyeing the market. According to Toyo Securities analyst Hideki Yasuda, breaking Ibiden’s dominant position as a supplier will not be easy despite this.
“Nvidia’s AI chips need sophisticated substrates, and Ibiden is the only one that can mass produce them at a good production yield,” he said. “Taiwanese competitors won’t be able to take Ibiden’s share away by much.”
AI semiconductors now account for over 15% of Ibiden’s sales, which total approximately ¥370 billion ($2.3 billion), and this share will grow. After overcoming some initial technical hurdles, Nvidia announced the production of its next-generation Blackwell chips. In the long term, Nvidia may face increasing competition from application-specific chips developed by Marvell Technology Inc. and Broadcom Inc. and in-house silicon from Alphabet Inc.’s Google and Microsoft Corp. However, Kawashima believes Ibiden will be able to support all these players, as the design and materials used for AI chip packages will likely remain similar to those for Nvidia’s chips.
