According to news on August 2nd, with the growth of the 5G, AI, and high-performance computing markets, the demand for IC substrates, especially the ABF substrates, has exploded. However, due to the limited production capacity of relevant suppliers, the demand for ABF substrates is in short supply. Prices have also continued to rise. The industry expects that the tight supply of ABF carrier boards may continue to be relieved until 2023. In this context, Taiwan’s four major carrier board manufacturers, Xinxing, Nandian, Jingsus, and Zhending-KY, have all launched ABF carrier board expansion plans this year, with a total investment of more than 65 billion yuan in new plants in the mainland and Taiwan. Capital expenditures in Taiwan dollars (approximately RMB 15.046 billion). In addition, Japan’s IBIDEN and Shinko, South Korea’s Samsung Electro-Mechanics, and Daedeok Electronics have also further expanded their investment in ABF carrier boards.
ABF carrier board demand and prices have risen sharply, and the shortage may continue until 2023
IC Substrate is developed on the basis of the HDI board (High Density Interconnect Circuit Board), which has the characteristics of high density, high precision, miniaturization and thin profile. As an intermediate material connecting the chip and the circuit board in the chip packaging process, the core function of the ABF carrier board is to carry out higher-density high-speed interconnection and communication with the chip, and then through more lines on the IC carrier board and large PCB board. Interconnection plays the role of connecting the previous and the next, thereby protecting the integrity of the circuit, reducing the leakage, fixing the line position, helping the chip better heat dissipation to protect the chip, and even burying passive and active devices to achieve certain system functions.
At present, in the field of high-end packaging, IC substrates have become an indispensable part of chip packaging. Data shows that IC substrates currently account for about 40% of the overall packaging cost.
Among the IC substrates, depending on the CLL resin system and other technical paths used, there are mainly ABF (ajinomoto build-up film) substrates and BT substrates.
Among them, ABF carrier boards are mainly used in high-calculation computing chips such as CPU, GPU, FPGA, and ASIC. After these chips are produced, they usually need to be packaged on the ABF carrier board before being assembled on a larger PCB board. Once the ABF carrier board is out of stock, large manufacturers including Intel and AMD will not escape the fate of not being able to ship their chips. The importance of the ABF carrier board is evident.
Since the second half of last year, thanks to the growth of markets such as 5G, cloud AI computing, and servers, the demand for high-performance computing (HPC) chips has increased, coupled with the increase in market demand for home office/entertainment, and automobiles. The demand for CPU, GPU, and AI chips on the terminal side has greatly increased, and the demand for ABF carrier boards has also shown a skyrocketing trend. Coupled with the impact of the fire accident at the IBIDEN Aoyagi factory, a large IC carrier board manufacturer, and the Xinxing Electronic Oriole plant, the global ABF carrier board has been in serious demand.
In February of this year, there was news from the market that the ABF carrier board is in serious shortage and the delivery cycle has been as long as 30 weeks. As the supply of ABF substrates exceeds demand, prices have continued to rise. Data shows that since the fourth quarter of last year, IC substrates have continued to increase prices, among which BT substrates have risen by about 20%, while ABF substrates have increased by as much as 30%-50%.
Since the production capacity of ABF substrates is mainly in the hands of a few Taiwanese, Japanese and Korean manufacturers, their expansion in the past was also relatively limited, which also made it difficult to alleviate the shortage of ABF substrates in the short term.
Therefore, many packaging and testing manufacturers have begun to suggest that end customers change the manufacturing process of some modules from the BGA process that requires ABF substrates to the wire-to-line QFN process to avoid delays in shipments due to the lack of ABF substrate production capacity. Status.
Some carrier board manufacturers said that, now, the carrier board manufacturers do not have much capacity to contact any high unit price “jump-in-line” orders, and everything is mainly based on customers who have ensured production capacity. Now some customers even talk about production capacity and talk about going to 2023,
Earlier research reports by Goldman Sachs also showed that although the capacity of ABF substrates expanded by IC substrate manufacturer Nandian at its Kunshan plant in mainland China is expected to increase in volume in the second quarter of this year, the delivery period of equipment required for the expansion has been extended to 8-12 months. This year, the global ABF substrate production capacity will only increase by 10% to 15%, but market demand continues to be strong, and the overall supply-demand gap is estimated to be difficult to alleviate by 2022.
Looking at the next two years, as the demand for PCs, cloud servers, and AI chips continue to grow, the demand for ABF carrier boards will continue to increase. Coupled with the construction of global 5G networks, it will also consume a large amount of ABF carrier boards.
In addition, with the slowdown of Moore’s Law, chip manufacturers have begun to use more advanced packaging technologies to continue to promote the economic benefits of Moore’s Law. Large and low production yield is expected to further increase the demand for ABF substrates. According to the forecast of Tuopu Industry Research Institute, the average monthly demand for global ABF substrates will grow from 185 million to 345 million from 2019 to 2023, with a compound annual growth rate of 16.9%.
Carrier board manufacturers have expanded their production aggressively.
In view of the current shortage of ABF substrates and the continued growth of market demand in the future, Taiwan’s four major IC substrate manufacturers Xinxing, Nandian, Jingsus, and Zhending-KY have all launched expansion plans this year, and the total will be in the mainland and Taiwan. The factory invested more than 65 billion Taiwan dollars (approximately 15.046 billion yuan) in capital expenditures. In addition, Japan’s IBIDEN and Shinko have also finalized the expansion of 180 billion yen and 90 billion yen respectively. South Korea’s Samsung Electro-Mechanics and Daedeok Electronics also further expanded their investments.
Among the four major Taiwan-funded IC substrate manufacturers, the largest capital expenditure this year was the leading manufacturer Xinxing, which reached 36.221 billion Taiwan dollars (approximately RMB 8.884 billion), accounting for more than five of the total investment of the four major manufacturers. This is an increase of 157% from last year’s NT$14.87 billion. Xinxing has raised capital expenditures four times this year, highlighting the current market demand exceeds demand. In addition, Xinxing has signed a three-year long-term contract with some customers to avoid risks when market demand reverses.
Nandian plans to spend at least NT$8 billion (approximately RMB1.852 billion) in capital expenditures this year, an annual increase of more than 9%. At the same time, it will also carry out NT$8 billion investment projects in the next two years for the expansion of the Taiwan Forest Plant. The ABF carrier board production line is expected to open a new carrier board production capacity from the end of 2022 to 2023.
Thanks to the strong support of the parent company Pegatron Group, Jingsus actively expands the production capacity of ABF substrates. This year’s capital expenditure including land acquisition and production expansion is estimated to exceed the 10 billion Taiwan dollar mark, of which the total purchase of land and buildings in Yangmei will amount to 4.485 billion yuan. In addition to the original plan to expand the production of ABF substrates, purchase equipment, and process de-bottleneck investment, total capital expenditure is expected to increase by more than 244% compared with last year, the largest increase in the industry, and it is also the second capital expenditure in Taiwan to exceed 10 billion yuan. The carrier board factory at the New Taiwan dollar mark.
Under the one-stop-shopping strategy of Zhending Group in recent years, in addition to the existing BT carrier board business that has successfully profited and continued to double its production capacity, it has also finalized a five-year strategy for carrier board layout and has begun to enter ABF carrier board.
While Taiwanese factories are aggressively expanding ABF carrier board production capacity, recent Japanese and Korean carrier board manufacturers are also accelerating their capacity expansion plans.
Ibiden, a large Japanese carrier board manufacturer, has finalized a 180 billion yen (approximately 10.606 billion yuan) expansion plan for the carrier board, with the goal of creating an output value of more than 250 billion yen by 2022, equivalent to approximately 2.13 billion U.S. dollars. Shinko, another major Japanese carrier board manufacturer, and an important Intel supplier has also finalized a 90 billion yen (approximately RMB 5.303 billion) expansion project. It is estimated that the carrier board production capacity will increase by 40% in 2022 and the revenue will reach approximately 1.31 billion U.S. dollars.
In addition, South Korea’s Samsung Electro-Mechanics increased its carrier board revenue to more than 70% and continued to invest last year. Another Korean carrier board manufacturer Daedeok Electronics also converted its HDI plant into an ABF carrier board plant, with the goal of 2022. Revenue increased by at least $130 million.
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