Sales of the 112-year-old firm’s AI-use substrates are strong with clients shopping for up all that Ibiden has, CEO Koji Kawashima mentioned, including that that demand is more likely to final no less than by means of subsequent yr.
Ibiden is constructing a brand new substrate manufacturing unit in Gifu prefecture, central Japan, anticipated to go surfing at 25 % manufacturing capability across the final quarter of 2025 earlier than reaching 50 % by March 2026. But that will not be sufficient, Kawashima mentioned. The firm is in talks about when to get the remaining 50 % capability on-line.
“Our clients have issues,” he mentioned in an interview. “We’re already being requested about our subsequent funding and the following capability growth.”
Ibiden’s shares rose as a lot as 5.5 % in Tokyo on Monday, their largest intraday achieve in additional than a month.
Ibiden’s purchasers embody Intel, Advanced Micro Devices, Samsung Electronics, and Taiwan Semiconductor Manufacturing, in addition to Nvidia, based on information compiled by Bloomberg. Many of them seek the advice of with the Japanese firm early in product improvement, as a result of the substrates — which assist transmit indicators from semiconductors to the circuit board — have to be tailor-made for every chip. Substrates should be made to resist the warmth of an Nvidia graphics processing unit to type an AI chip package deal full with elements corresponding to reminiscence.
Founded as an influence utility firm in 1912, Ibiden developed semiconductor experience by means of a partnership with Intel that Kawashima cultivated by ready every single day in entrance of the Santa Clara firm to cease engineers and executives for product suggestions within the early Nineteen Nineties. At one level, Intel comprised round 70 % to 80 % of Ibiden’s income from chip package deal substrates. That fell to round 30 % within the fiscal yr ended March because the US chipmaker struggled to execute a turnaround that not too long ago noticed the ousting of CEO Pat Gelsinger.
Reliance on Intel has damage Ibiden’s inventory, down round 40 % this yr. In October, Ibiden revised down its revenue outlook after sluggish demand for elements used normally function servers outweighed AI server-related progress. But whereas noting it was vital to increase enterprise with chipmakers apart from Intel, Kawashima mentioned he was assured Intel will bounce again.
“Intel’s total expertise may be very refined,” the 61-year-old mentioned. “Intel raised us up and opened so many doorways. Our relationship with Intel will all the time be our treasure, and Intel will without end be an vital buyer.”
With many international chipmakers unwilling to switch their newest expertise to the US, Intel is more likely to play a key function in Washington’s objective to spice up cutting-edge semiconductor manufacturing capabilities at residence, Kawashima mentioned. Ibiden itself has no manufacturing amenities within the US. It has no plans to construct any resulting from the price of labor and logistics, Kawashima mentioned, regardless of US president-elect Donald Trump’s plans to impose tariffs on a variety of merchandise.
All of Nvidia’s AI semiconductors now use Ibiden’s substrates, though Taiwanese rivals corresponding to Unimicron Technology are eyeing the sphere. But it will not be straightforward to interrupt Ibiden’s place as dominant provider, based on Toyo Securities analyst Hideki Yasuda.
“Nvidia’s AI chips want refined substrates, and Ibiden is the one one that may mass produce them at an excellent manufacturing yield,” he mentioned. “Taiwanese opponents will not be capable of take Ibiden’s share away by a lot.”
AI semiconductors earn greater than 15 % of Ibiden’s gross sales of round ¥370 billion ($2.3 billion or roughly Rs. 19,673 crore), with that proportion anticipated to rise additional. Nvidia’s mentioned it is begun full manufacturing of its next-generation Blackwell chips after encountering some preliminary technical challenges.
Over the long run, Nvidia might face rising competitors from application-specific chips by Marvell Technology Inc. and Broadcom Inc. in addition to in-house silicon from Alphabet’s Google and Microsoft. In idea, Ibiden ought to be capable of accommodate all of them, as AI chip package deal design and materials will probably stay much like Nvidia’s, based on Kawashima.
© 2024 Bloomberg LP
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