Recently, NVIDIA announced partnerships with supply chain partners including Ibiden, Samsung Electro-Mechanics, Unimicron, Amkor, KYEC, and SPIL to expand related manufacturing capacity. Among these, product substrate capacity is planned to increase to 2.5 times current levels over the next three years, Amkor plans to increase interposer wafer capacity by more than 300% by the end of 2028, and SPIL plans to increase optical engine capacity for co-packaged optics (CPO) to 15 times current levels by mid-2027. With the release of this news, the continuous expansion of AI computing infrastructure is triggering supply chain competition that is extending from core chips like GPUs to key areas including advanced packaging, testing, and high-speed optical interconnect. Among these, ABF has become a battleground that major chip manufacturers must compete for.
ABF Lead Times Keep Extending
As widely observed, supply pressure on ABF substrates is further intensifying. According to AI infrastructure key component lead time data compiled by TrendForce, ABF substrate lead times have extended to 48 to 56 weeks, equivalent to 4 to 4.7 times the 12-week baseline under balanced supply-demand conditions. In other words, a new order may take up to approximately 13 months from placement to delivery. By comparison, HDD lead times stand at 50 weeks, DRAM at 20 weeks, and MLCC at 30 weeks, highlighting the severity of supply chain tightness in AI infrastructure.
ABF substrates serve as critical connection carriers between high-performance chips and motherboards, widely used in CPUs, GPUs, and AI accelerators. As AI chips evolve toward higher performance, larger package sizes, and more complex interconnections, substrates need to support higher-density circuits and more layers of routing, increasing manufacturing difficulty. Meanwhile, AI servers' demand for memory, networking, and power management components is growing simultaneously, extending supply chain pressure beyond any single segment.
TrendForce data also shows that among the six categories of AI infrastructure key components it tracks, all except GPUs are in shortage. Among these, ABF substrates, HDDs, and DRAM are classified as severely short, while MLCCs and enterprise SSDs also face supply insufficiency. Even though GPU lead times are in the balanced range of 20 to 30 weeks, shortages of other key components could still slow the production and delivery of complete AI servers.
The problem is that new capacity cannot immediately fill the gap. Expanding high-end substrate production lines involves facility construction, equipment procurement, process debugging, and yield improvement. Investment does not mean capacity can be released quickly. Current AI demand is growing rapidly, while suppliers' previous expansion plans may not keep pace in time, causing persistent supply-demand mismatch.
More notably, supply constraints extend to semiconductor equipment components. Reports indicate that some key equipment components made in Japan have lead times of up to 40 months; certain deposition equipment parts that could previously be delivered in about 4 months now require approximately 10 months of waiting. Some packaging equipment components, even after shifting to domestic Korean supply, still have lead times extended by about 50% compared to the past.
This creates a concerning cycle: growing AI chip demand drives expansion of substrates, memory, and other components; but expansion itself requires semiconductor manufacturing equipment, and equipment makers are also affected by key component shortages. The stronger downstream demand becomes, the more the supply chain needs to expand capacity, yet the more it may be constrained by upstream equipment delivery cycles.
Additionally, reports note that increased capital expenditure, slowing production efficiency improvements, and HBM production consuming more wafer input are also putting pressure on memory industry supply expansion. Current supply tightness cannot be resolved simply by increasing investment; it involves capacity, equipment, and manufacturing efficiency across multiple segments.
Extending lead times are also changing how the supply chain conducts transactions. Reports indicate that high-spec FC-BGA substrate prices face upward pressure, and the importance of long-term supply agreements is increasing. Customers hope to lock in volumes in advance and sign long-term contracts to reduce future shortage risks; suppliers with stable capacity that can deliver on schedule have opportunities to gain stronger bargaining power.
Taking Samsung Electro-Mechanics as an example, reports indicate that its FC-BGA substrate and MLCC production facility utilization rates are approaching full capacity. When capacity is difficult to expand quickly, manufacturers with stable delivery capabilities will more easily secure long-term orders and increase the revenue share of high-value-added products.
For the ABF industry, what truly deserves attention is not just how many weeks lead times reach, but when new capacity can come online and whether it can match the continuously upgrading specifications of AI chips. If demand continues to grow while equipment, materials, and manufacturing capabilities cannot improve in tandem, ABF substrate supply-demand tightness could persist longer.
However, lead time data reflects current supply chain conditions and does not mean all specifications and all customers have identical lead times. Under such demand conditions, ensuring ABF supply has become the top priority for major chip companies. This has also triggered a capacity battle.
Three Chip Giants Lock in Capacity
According to Economic Daily News, Intel, NVIDIA, and AMD are reported to have paid deposits totaling over NT$100 billion to pre-book high-end IC substrate capacity. Meanwhile, Taiwan's top three substrate makers Unimicron, Kinsus, and Nan Ya PCB are accelerating expansion, with announced construction investment this year totaling NT$161.2 billion, a record high.
This capacity battle over ABF substrates reflects the reality that AI chip demand continues to grow while high-end substrate capacity cannot expand quickly in the short term. For chip manufacturers, GPU and AI accelerator performance is important, but whether products can be successfully packaged, tested, and ultimately delivered also depends on whether the upstream supply chain can provide sufficient capacity. When high-end substrate supply tightens, locking in capacity in advance becomes an important means of ensuring product delivery.
According to industry estimates cited in reports, Intel's long-term pre-purchased substrate capacity amounts to approximately US$3 billion. AMD previously announced US$10 billion in Taiwan investment, with market speculation that about US$1 billion may involve the substrate supply chain. NVIDIA is also speculated by the market to have related investments of approximately US$1 billion in Taiwan substrate manufacturers, with further increases possible in the future. Based on these estimates, the three manufacturers' combined capital involvement in the substrate industry is approximately US$5 billion. However, these figures are industry rumors or market estimates, not officially confirmed order and prepayment amounts.
Customers paying advances to lock in capacity also provides motivation for substrate manufacturers to expand. Building high-end ABF substrate production lines requires substantial capital investment, and equipment procurement, facility construction, and subsequent process debugging all take time. For chip manufacturers, early positioning helps reduce future supply uncertainty; for substrate manufacturers, growing customer demand provides justification for expansion.
Taiwan's three major substrate manufacturers have already begun increasing capital investment. Unimicron added NT$19.7 billion in capital expenditure, bringing total capital expenditure this year to NT$53.7 billion, while also adding NT$17.6 billion in long lead-time equipment procurement orders. The company also acquired Bridgestone's Hukou plant office for approximately NT$10.08 billion to prepare for medium-to-long-term operations and high-end substrate capacity expansion. Kinsus continues transitioning toward high-end substrates and gradually phasing out traditional PCB production. The company is using NT$23.5 billion in capital expenditure to meet ABF substrate equipment expansion needs for the next three years, with NT$8 billion planned for 2026, approximately NT$6 billion for ABF substrate investment. Additionally, the company added NT$19.6 billion in special project capital expenditure budget. Nan Ya PCB also plans to invest NT$46.8 billion to build a smart factory producing large-size, high-layer-count high-end substrates.
The expansion directions of these three manufacturers reflect that AI chip demand is pushing the substrate industry into a new investment cycle. However, expansion does not mean supply tightness can be immediately alleviated. Facility construction, equipment delivery, process debugging, and yield improvement all require time, and whether new capacity can meet demand in time also depends on customer product specifications and mass production schedules.
From chip giants locking in capacity in advance to substrate manufacturers significantly increasing capital expenditure, the impact of AI infrastructure construction is gradually transmitting to the upstream supply chain. As high-end chips' packaging requirements continue to rise, ABF substrates are no longer just supporting materials in chip packaging; their supply capability is becoming an important factor affecting AI chip production and delivery.
Samsung Electro-Mechanics Courted by All
As AI chip giants compete to lock in ABF substrate capacity, Samsung Electro-Mechanics is emerging as an important player in supply chain competition. On October 21, Samsung Electro-Mechanics announced a strategic partnership with NVIDIA, with both parties jointly investing to expand dedicated production facilities in Sejong and Busan, South Korea, to supply ABF packaging substrates for NVIDIA's next-generation AI processors and data center high-speed network switches.
Samsung Electro-Mechanics plans to begin supply from 2026, with future supply volumes expected to grow at double-digit rates annually for years to come, and by 2028, capacity allocated to NVIDIA will account for a significant portion of the company's total annual substrate capacity. This means the collaboration between NVIDIA and Samsung Electro-Mechanics is not an ordinary supplier procurement, but combines capacity expansion with long-term supply demand.
For NVIDIA, AI infrastructure construction requires continuously expanding supply scale of chips and data center network equipment, and locking in high-end substrate capacity in advance helps reduce the impact of supply chain bottlenecks on product delivery. NVIDIA's Executive Vice President of Operations Debora Shoquist also stated that the pace of AI infrastructure construction requires the company to expand manufacturing capacity globally, and partnering with Samsung Electro-Mechanics will further expand its substrate supplier network.
For Samsung Electro-Mechanics, this represents an important opportunity to enter the high-value-added AI semiconductor substrate market. The company will set up dedicated production lines at its main production bases in Sejong and Busan, South Korea, with supply scope covering not only packaging substrates needed for NVIDIA's computing chips but also network switch substrates for high-speed chip interconnection within data centers. As AI computing and high-speed networking develop in tandem, substrate manufacturers need to simultaneously meet high-density interconnection requirements for both computing chips and network equipment.
The real challenge lies in technology. Samsung Electro-Mechanics noted in its announcement that as packaging substrate sizes expand and embedded devices increase, manufacturing complexity also rises. To reduce signal loss, substrates need to achieve ultra-fine circuits; to ensure mass production yield and long-term reliability, advanced warpage control and flatness management capabilities are also essential.
Moreover, next-generation AI chips' high-speed computing places higher demands on power supply stability. Samsung Electro-Mechanics plans to leverage its technical accumulation in multilayer ceramic capacitors (MLCC) and silicon capacitors to embed passive components into substrate structures to suppress electrical noise generated by high-speed computing and improve power management efficiency. This approach of combining packaging substrate manufacturing capability with capacitor technology is one of Samsung Electro-Mechanics' competitive advantages that distinguishes it from pure substrate suppliers.
From this collaboration, it is evident that competition in the AI chip industry is extending toward packaging and interconnection segments. GPU performance is important, but whether chips can be stably mass-produced also depends on whether substrates can meet larger sizes, higher-density circuits, and stricter reliability requirements. NVIDIA locks in capacity in advance, while Samsung Electro-Mechanics uses long-term supply cooperation to expand its high-end substrate business, with both parties getting what they need.
As AI infrastructure continues to expand, ABF substrates have become an indispensable link in the chip supply chain. Whether Samsung Electro-Mechanics can convert this collaboration into long-term competitive advantage still depends on the construction progress of dedicated production lines, mass production yield, and whether it can continuously meet NVIDIA's ever-increasing product requirements.
Final Thoughts
If we shift our gaze away from ABF substrates themselves, we find that this capacity battle reflects a change in the competitive logic of the AI industry: in the past, the industry focused more on who could design higher-performance chips and who could advance advanced processes first; now, as the scale and complexity of AI chips continue to increase, the factors determining competitive outcomes are expanding from single-chip performance to the collaborative capability of the entire manufacturing system.
This also means the supply chain can no longer simply understand expansion as adding factories and procuring equipment. For key segments like ABF substrates, true competitiveness comes from long-term integration among materials, equipment, processes, yield, and customer demand. Even with continuous increases in capital investment, if key equipment delivery, technical accumulation, and talent reserves cannot keep pace simultaneously, new capacity may not translate into effective supply in time.
For chip manufacturers, locking in capacity in advance can alleviate immediate supply pressure but cannot replace the supply chain's own capability building; for substrate manufacturers, the high-growth opportunity brought by AI is worth seizing, but they also need to be wary of equating short-term demand directly with long-term growth. AI infrastructure investment will ultimately experience cyclical changes, and how to balance expansion speed with investment returns will test every supplier's judgment.
From a longer-term perspective, what the ABF industry truly needs is not just more capacity, but a more resilient supply system better able to adapt to technological iteration. As the connections between chip design, advanced packaging, and substrate manufacturing become increasingly tight, suppliers also need to move from passively taking orders to participating earlier in customers' technology planning and product development.
In the AI era, what is scarce has never been just a particular material or technology, but the ability to truly connect technology, manufacturing, and large-scale delivery. ABF being fiercely sought after is merely one facet of this industrial competition surfacing.
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