Nvidia supplier Ibiden is considering faster expansion to meet AI demand

(Bloomberg) — Ibiden Co., the leading supplier of chip packaging substrates used in Nvidia Corp.’s cutting-edge semiconductors. may need to increase 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 substrates are robust and customers are buying up everything Ibiden has, said CEO Koji Kawashima, adding that demand is likely to continue until at least next year.

Ibiden is building a new substrate factory in Gifu Prefecture in central Japan, which is expected to be operational in the last quarter of 2025 with a production capacity of 25% and reach 50% by March 2026. But that may not be enough, Kawashima said. The company is currently negotiating when the remaining 50% of capacity will come online.

“Our customers have concerns,” he said in an interview. “We are already being asked about our next investment and capacity expansion.”

Shares of Ibiden rose as much as 5.5% in Tokyo on Monday, their biggest intraday gain in more than a month.

Ibiden’s customers include Intel Corp., Advanced Micro Devices Inc., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., as well as Nvidia, according to 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 – must be tailored for each chip. The substrates must be made to withstand the heat of an Nvidia graphics processor to form an AI chip package complete with components such as memory.

Founded in 1912 as an energy supplier, Ibiden developed its semiconductor expertise through a partnership with Intel, which Kawashima cultivated by waiting outside the company in Santa Clara every day in the early 1990s to listen to engineers and executives for product feedback. At one point, Intel accounted for about 70% to 80% of Ibiden’s chip packaging substrate sales. That fell to about 30% in the fiscal year that ended in March, as the U.S. chipmaker struggled to turn things around, which recently led to the ouster of CEO Pat Gelsinger.

Reliance on Intel has hurt Ibiden shares, falling about 40% this year. In October, Ibiden revised down its profit outlook after sluggish demand for general-purpose server components outweighed growth related to AI servers. However, Kawashima noted that it was important to expand business with chipmakers other than Intel, but said he was confident Intel would get back on its feet.

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