Nvidia vendor Ibiden considers faster expansion for AI demand

(Bloomberg) — Ibiden Co., the dominant supplier of chip package substrates used in Nvidia Corp.’s cutting-edge semiconductors, may have to accelerate the pace of ramping up production capacity to keep up with demand, according to its chief executive director officer.

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Sales of the 112-year-old AI company’s substrates have been steady, with customers buying everything Ibiden has, Chief Executive Officer Koji Kawashima said, adding that demand is likely to continue at least into next year.

Ibiden is building a new substrate factory in Gifu Prefecture, central Japan, which is expected to be operational at 25% production capacity around the last quarter of 2025, before reaching 50% by March 2026. But that may not be enough, Kawashima said. The company is in discussions about when to bring the remaining 50% capacity online.

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

Ibiden shares rose as much as 5.5 percent in Tokyo on Monday, their biggest intraday gain in more than a month.

Ibiden’s clients include Intel Corp., Advanced Micro Devices Inc., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., as well as Nvidia, according to data compiled by 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 Nvidia’s GPU to form an AI chip package complete with components such as memory.

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

Intel’s reliance has hurt Ibiden’s stock, which is down about 40% this year. In October, Ibiden revised down its earnings outlook after weak demand for components used in general-purpose servers outpaced growth related to AI servers. But while noting that it was important to expand business with chipmakers other than Intel, Kawashima said he was confident that Intel would recover.

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