Facing a supply shortage of high-end fiberglass materials triggered by the AI server wave, global key supplier Nitto Boseki has chosen to forgo short-term price increases. Instead, it is opting for stable pricing to facilitate capacity expansion and market share consolidation. The company has significantly raised its mid-term capital expenditure budget by 50%, betting on the long-term prosperity of the AI fiberglass market. Nitto Boseki's management has clearly stated that there are no plans to raise prices for low thermal expansion coefficient (Low-CTE) glass fabric (T-glass) or adjust quotes for low dielectric glass. The company will maintain the prices set at the beginning of the current fiscal year and continue supplying customers. Expanding capacity supply and stabilizing market share are identified as the top priorities at this stage. The company emphasized that as long as product competitiveness and market demand persist, it will not hesitate to advance production expansion investments. This strategy is being implemented alongside a substantial capital commitment. Nitto Boseki has increased its capital expenditure budget for the mid-term management plan from fiscal 2024 to 2027 from the originally planned 80 billion yen to 120 billion yen, a 50% increase. The company plans to simultaneously add a glass fabric production line in Fukushima, Japan, and new glass melting furnace equipment in Taiwan, China. This announcement suggests that, against the backdrop of continued tight T-glass supply, short-term price pressures for downstream IC substrate and printed circuit board (PCB) manufacturers will be somewhat alleviated. As a core foundational material for IC substrates and PCBs, T-glass, with its low thermal expansion properties, can effectively prevent deformation of advanced packaging under high-temperature environments. It is a crucial component for ensuring the stability of high-end computing. With demand from AI servers and edge devices consistently exceeding expectations, the supply-demand gap for this material is widening rapidly. Consequently, Nitto Boseki's pricing and capacity expansion strategy is impacting the entire AI hardware supply chain.
AI Server and Edge Device Demand Both Exceed Expectations
According to comprehensive Japanese media reports, Nitto Boseki originally planned to focus on expanding low dielectric glass fiber capacity. However, as actual demand from AI servers and edge devices like smartphones far surpassed expectations, the supply-demand gap for Low-CTE T-glass has widened sharply. This has prompted the company to adjust its strategic focus and accelerate T-glass production expansion. The company points out that T-glass demand is expanding rapidly, showing strength in both "thick" and "thin" fabric segments. Demand for "thick fabric" used in semiconductor packaging substrates for AI servers continues to rise, while the growth rate for "thin fabric" used in edge devices like smartphones exceeds initial forecasts. Faced with tight supply and demand on both fronts, an internal consensus has formed: further increased capital investment is necessary to simultaneously meet the strong demand from both thick and thin fabric customer segments.
Rejecting Price Hikes, Prioritizing Market Share
Regarding the widely watched price trend, Nitto Boseki's management has explicitly stated that there are no plans for further price adjustments for T-glass or low dielectric glass. Supplies will continue at the prices set at the beginning of this fiscal year. This choice runs counter to the traditional logic of raising prices during supply shortages. The company's strategic rationale is that during a phase of deep expansion in the AI hardware supply chain, securing customers first and solidifying market leadership offers greater long-term returns than short-term price increase benefits. The company reiterates that as long as products maintain competitive strength and market demand remains robust, it will continue to advance production expansion investments. To support this strategy, Nitto Boseki has raised its capital expenditure budget for the 2024-2027 mid-term management plan from 80 billion yen to 120 billion yen, a 50% increase. In terms of capacity layout, the company plans to add a glass fabric production line in Fukushima, Japan, and simultaneously install new glass melting furnace equipment in Taiwan, China, creating a dual-line expansion setup in Japan and Taiwan. According to the company, this arrangement aims to simultaneously meet the demand from both thick and thin fabric customer segments. It also seeks to further consolidate its market leadership in high-end fiberglass materials by leveraging its capacity advantage.
The Strategic Material Value of T-glass
Glass fabric is a key component of IC substrates and PCBs, serving as the foundational raw material for building the chip reinforcement layer in electronic devices. Under the extremely stringent requirements for micro-deformation in advanced chip packaging, T-glass, with its low thermal expansion characteristics, can effectively suppress packaging deformation. It has become an irreplaceable core material for ensuring the stable operation of high-end computing. Nitto Boseki is a leading global manufacturer controlling the key supply of high-end low thermal expansion glass fiber. As AI infrastructure construction continues to accelerate, the structural growth trend in T-glass demand is gradually solidifying. Nitto Boseki's strategy of trading short-term price increase opportunities for market share is essentially an active bet on the long-term sustainability of this boom cycle.
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